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COMMENT
His reaction to Monday's sharp sell-off was, this has been a long time coming. We haven't had a correction in a long time. Expectations have long been building about the recovery and reopening, but no one can predict how long or smooth that recovery will be. Yesterday saw the start of hesitation on some people's part. Valuations look high, but are distorted by very low interest rates. Don't be surprised. Have cash handy on the sidelines if there's a 10-15% correction, so you can buy those companies for the long term. Meanwhile, he's staying with safe, dividend-paying stocks. Any correction won't last long, he suspects. Energy remains undervalued with some good buys here. Financials are safe. Pipes and utilities too, based on many contracts, though they could suffer a hiccup with interest rates tick up. We're seeing the start of price inflation for consumers in many items.
BUY ON WEAKNESS
If they did buy KSU, it would be a slight plus. If they don't, it wouldn't take away from CN's story. They have one of the premier network of all North American rails. If you believe that economic expansion continues, CN is well position. His only problem with all the rails is the slightly higher PE than he'd like to see. But long-term, CN is good to hold. He would buy this at $115, though, not now.
Transportation
BUY
Likes it. More Canadian-centric than their peers. The banks are delivering very good ROE, though not sure if they can maintain that. CM pays a dividend over 4%. It's well-managed.
Michael SprungOwned
banks
COMMENT
Oil stocks and energy sector outlook Energy is still under pressure. Many confuse energy with the ESG movement by blaming the oil companies. In reality, oil is still very much needed. We won't see peak oil demand for another decade as China and India's economies gain speed. Oil prices are never stable, and company earnings will be pressured to be shared as buybacks or dividend hikes. Focus on an oil company with flexible and can buy other companies; he expects more industry consolidation. You need some exposure to energy and don't sell your energy holdings.
COMMENT
Gold outlook, and caller needs to sell AEM shares from an estate soon 1) Sell and lock in the value if you will be making distributions shortly. 2) AEM is a really good company with a good project profile with a promising future. 3) Gold in coming years will be fairly strong and likely rise, but gold is a hard one to predict. 4) Overall, AEM is good.
precious metals
BUY ON WEAKNESS
Very well-managed. Good for a longer-term portfolio that you can buy today. Doesn't expect much pressure on this if markets dip. BAM is fairly valued. If it was 10% cheaper, he'd take a more serious look at this.
Michael SprungOwned
managementdiversified
COMMENT
All infrastructure stocks will do well. He's been looking at WSP. He prefers the valuation of Stantec, though. WSP is well run, but the PE is anticipating projects coming in sooner than likely to happen. Governments have delayed infrastructure projects in the past, so keep that in mind. If you own this, hold on. This will be fine long term.
INDUSTRIAL PRODUCTS
PAST TOP PICK
(A Top Pick Jun 29/20, Up 52%) Likes it a lot and it starting to hit its stride as some of their invested companies are coming back, while AD settles with other companies. They're having a record year for capital deployment. More opportunities have opened. He likes their diversity across industry. Most revenues now come from the U.S. He'd certainly buy at these levels.
Michael SprungOwned
Financial Services
PAST TOP PICK
(A Top Pick Jun 29/20, Up 170%) Pared this position, but it continues to excel. Their purchase of a UPS division resulted in a surprise synergy. TFII still has a ways to go. It's modestly priced. You can hold onto this for growth as economies recover. They are known for excellent tuck-in acquisitions and managing costs. An excellent company in logistics. Even he's surprised with their recent run-up.
Michael SprungOwned
Transportation
PAST TOP PICK
(A Top Pick Jun 29/20, Up 32%) They became big after buying Aetna. They're broadening offering within stores to offer services like nurse practitioners. They think beyond just being a drug store. They're well-positioned in their industry. Take a long-term view, but you can buy this at current prices.
Michael SprungOwned
specialty stores
COMMENT
In the midst of a takeover battle from two companies, Pembina and Brookfield An interesting tug-of-war. He sold at the initial offer of $18. Since then, Brookfield has entered the picture to battle Pembina. Pembina is the logical buyer, because there is more synergy. But Brookfield wins on a valuation basis. He doesn't know how this will end, but he expects people to tender in Brookfield's offer. Maybe both companies partially finance and defray the risk. Anything can happen in the coming weeks. He's tempted to tender to the Brookfield offer--the price won't get much better than that.
oil pipelines
BUY
They're in a good industry. They've been expanding in a disciplined manner. The dividend pays over 2%. Price-to-book is around 2.5x, though the PE is a little high. Their ROE is fairly attractive that he expects to grow in coming years. Good managers across their operations. It's trading a little below its intrinsic value. You can buy this five years and do well.
Business Services
BUY ON WEAKNESS
A few years ago, he though the PE was stretched, but is better now and he's taking a close look at it. It suddenly jumped from $44 to $49. Very well-managed. They were put in the penalty box when they tried to buy Carrefour. They're planning to add fresher food in their stores. It's an economic recovery play. Buy under $45 though you could buy it at current levels.
food stores
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