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COMMENT
Market Outlook The market is trying to decide where it wants to go and the S&P500 is 30% higher than levels pre-COVID. There has been a lot of government stimulus. The new COVID variants are causing the market to pause for now. The market is "shoot first ask questions later", meaning investors are looking well past the current environment. Companies that were first hardest hit recovered well and now they have to justify the earnings outlook. You may have to pay a premium for the very best companies that will benefit most post-COVID.
BUY
Commodity prices have been very strong. She wonders if we are at a point where we see demand destruction. Farmer incomes are strong. There has been some US Administration tension over Belarus that may keep the potash market tight. They raised guidance and beat earnings, yet the stock sold off. She still owns it in their Canadian equity portfolio and continues to like it here.
agriculture
BUY
They went through a time when the multiple was downgraded until they decided to get out of set contracts. With infrastructure spending go up there are a lot of good tailwinds for them. There is a lot of stimulus going into their industry and its fragmented there now, which should create good opportunities.
consulting
PARTIAL BUY
Taking a hit lately? A couple of years ago it was the only energy stock that could keep up with the TSX, but then they started having operational issues. Based on recent company comments, there appears to be room to improve on this. It may take time for them to come out the penalty box, but seem to be coming out. It should go up.
integrated oils
BUY
Natural gas prices are being pressured due to a lack of cold weather this time of year. Rest of year forecasts, however, call for colder than normal weather. It is a very strong operator, well positioned in the natural gas space. It has shifted from mid-cap to larger investors. With years of underinvestment, they feel the sector has room for further improvement despite the recent run up in equity prices. A lot of cash flow should be coming. They like it here and own quite a lot.
oil
gas
HOLD
A lot of good things working for them -- ecommerce and trucking demand. Management has done a great job in extracting value from their acquisitions. The UPS assets they bought are paying off quicker than expected. It has held up well as investors have been rotating into non-COVID benefactor companies -- she likes its ability to hold value. It is possible it may just go sideways. They have very little exposure after having done well over the last year and a half.
Transportation
BUY
Why is it dropping? There is nothing specific to the company that may be causing it to pause. They have been adding to their holdings lately. Being an initial COVID beneficiary, it may just be pausing. She likes how they have pivoted to the cloud platform. The next move will be based on further automation investments. She continues to like it at these levels.
computer software
processing
PAST TOP PICK
(A Top Pick Oct 07/20, Up 86%) They continue to own a substantial position. A lot of very positive tail winds exist. They are consultants in the environmental water space and are benefiting from ESG plans of companies. Back log orders have increased for three quarters in a row. Add the infrastructure spending increases out of the US and there are good opportunities for the next couple of years.
environmental
HOLD
The company is doing all the right things. They have been strong operators as well. It is a tough position right now due to the sharp increase in wages. There may not be a short term solution to this and they have been slow on their investment plans. They exited on the recent earnings and don't see it improving unless a major acquisition is announced soon.
food stores
