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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.
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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.
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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.
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RISKY BUY
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.
Technology
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.
Transportation
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.
Transportation
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.
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