COMMENT
Markets. Seeing some change in tone in the last couple of weeks. Volatility has been subdued for a long time. That may or may not be unfolding right now. Inflation is now on investors' radar screens, as well as the new virus variants. For 2022, he expects ongoing economic growth at an above-trend rate, and above-trend growth in corporate profits. Jitters will sort themselves out in due course. December consistently is seasonally the strongest month in the year for the Canadian stock market.
COMMENT
Focused on monetary policy? He manages balanced mandates including Canadian and US stocks, fixed income, preferred shares. Monetary policy has a big impact on the stock market and more so on the bond market. He's all over comments from the Fed, which indicate above-target inflation is finally catching their attention. Signals are fairly clear that tapering will be faster than anticipated, with first rate hikes coming sometime next year.
COMMENT
Canadian consumer. Macro backdrop is important. He likes to buy best in breed names across sectors that will be resilient to economic headwinds. He has exposure to both discretionary retail and staples. Canadian consumer has been on somewhat of a binge. Housing affordability is stretching household budgets, inflation is causing further pressure.
RISKY
Not one he'd likely buy. But for investors who have more risk tolerance for earlier stage companies, this price point could be interesting. Ad-buying platform using AI. Caters to all business sizes. Pretty good revenue line, makes money. Trades at a modest 8x enterprise value to EBITDA. Concerned that very few barriers to entry. Getting traction, growing fundamentally. Could be a takeout target. Pretty good business.
WEAK BUY
CP vs. CNR You can probably buy it here, hold it for the long term, make pretty good money, and outperform the TSX. He aims to buy the best opportunity in each sector, so he owns CNR. BC flooding will impact earnings of both, but not a long-term issue. KSU merger is this week, likely to be approved. Challenge integrating this sizeable acquisition. Opportunity is better in CNR.
BUY
CNR vs. CP You can probably buy CP here, hold it for the long term, make pretty good money, and outperform the TSX. He aims to buy the best opportunity in each sector, so he owns CNR. BC flooding will impact earnings of both, but not a long-term issue. KSU merger with CP is this week, likely to be approved, but a challenge integrating this sizeable acquisition. Opportunity is better in CNR.
BUY ON WEAKNESS
Mid-cap in building supplies and home improvement space. Growth cyclical. Tremendous compounder over time, about 19% over 10 years. Once you identify a company with organic and compounding growth like this, just buy it. Even better if you can get it on a pullback. Gangbuster year, sales grew 26%, earnings grew 62%. Future comparisons will be tough. Commodity cost pressures are upstream from them. Only 4 down years out of the last 25.
BUY
For income. Very competitive dividend, north of 5% and grows steadily, pretty safe. Organic growth opportunities like propane export. Conservatively financed, good capital allocator, strong and important strategic assets.
DON'T BUY
Good, not great. ROE is getting diluted with each successive acquisition. Bigger, but not as profitable. Getting harder to find acquisitions. Not competitive compared to the index.
BUY
Good growth stock. One of very few discretionary retailers that's doing well. Unpenetrated concept, especially outside Canada. Same store sales good. Demanding valuation, but executing well and has earned it. Your dollars would be well invested.
PAST TOP PICK
(A Top Pick Dec 02/20, Up 30%) Cheapest among the big 6 banks. Good opportunity here. Reported numbers better than expected. Buying back shares. Latin American footprint will have greater organic growth than the other banks. Still buying it.
PAST TOP PICK
(A Top Pick Dec 02/20, Up 8%) Double digit dividend increase. Perennially cheap, in stark contrast to its earnings growth rate. Good footprint in Canada, US, and Asia. Sees good upside, continues to buy.
PAST TOP PICK
(A Top Pick Dec 02/20, Up 5%) Accelerating organic growth initiatives, rather than "if you build it, they will come" strategy. Headwinds over next several quarters are acute labour shortages and wage pressures. These are not permanent; buy on dips.
BUY
Emerging growth industry that will be very big in time. Will be one of the dominant players. Likes the pullback, along with the valuation. Whole sector has pulled back on sentiment, legislative delays, heightened competition in Florida. When fundamentals improve, but the stock price goes the other way, you buy.
BUY
For income. Yield is somewhat lower, with valuation somewhat higher, than other renewables, because of strong organic growth prospects ahead of them. Likes it here. Renewables went on a tear, and they've all been giving up gains. Secular growth story, one of the best in the sector.