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COMMENT
Ignore the negative headlines. Focus on the long term. Headlines are all doom and gloom, not productive for most investors. Investors who were speculating in the markets earlier this year are losing enthusiasm. Very tough to trade these markets, can't do it profitably. More valuable to avoid capital gains and commissions and trying to guess the next squiggle upward in the line. The companies he invests in don't care about the Fed this next quarter or next. They're still making business plans, manufacturing things, and customers are still buying. All negative news does is make investors worry and make poor decisions.
COMMENT
Omicron variant. For 18 months people have been talking about how bad Covid is, but markets have been moving higher. Businesses like McDonalds and Disney are very adaptable. Shipping lines have eased and still delivering goods in time for the holidays. AMZN has been quite capable of keeping shelves stocked and shipped out. Headline news has already been discounted to a large extent.
COMMENT
Recent selloff. He's been a buyer 100%. DIS, for example, has enormous opportunities in virtual reality. Imagine the unique experiences possible from the comfort of your own home, without having to travel. People aren't necessarily focusing on the longer-term optionality that a company like DIS has.
DON'T BUY
Export facilities in jeopardy? Not a major concern. US needs Canadian oil and gas. Longer term, oil and gas use is declining. Adoption of EVs will increase. ENB will need heavy capex to stay on top of renewables. ENB oil shipments will stay stagnant, difficult to grow dividends at a rapid pace. Capital intensive, slow growth. Yield close to 7%.
oilgas pipelines
COMMENT
High dividend yield for a company like ENB. ENB thinks dividend will sustainably increase by 3% per annum. Investors cottoned on to ENB increasing dividends at a high rate, but then having to issue equity to pay for them. Portfolio managers were unwilling to keep it in their portfolios. ENB doesn't fit into the new ESG model. It's really a problem. So ENB has had to adjust its dividend growth model to a much lower number. Lots of debt. If interest rates rise, ENB would find it difficult to raise prices to consumers to service that debt.
BUY
Still likes it. Today it sold its low-margin, security business. Demonstrates very strong portfolio management. Accelerating stock buyback program, which will help boost earnings. Focus on growing global tool business. Well financed and managed. Innovative.
John O'Connell, CFAOwned
misc industrial products
DON'T BUY
He stays away from drug companies, always forced to do acquisitions. Costly and competitive business. Pressures from government. Boost from pandemic, and this will continue. Reasonable valuation. He prefers medical devices, where you don't need a PhD to understand what's coming next. Attractive yield about 3%.
biotechnologypharmaceutical
BUY ON WEAKNESS
Well run. Collapsing of dual class structure is a positive. Tremendous growth opportunities internationally. Getting pricey here, try around $47-48. Reasonable valuation. Ability to grow by acquisition is getting tougher. Huge free cashflow. Aggressive share buybacks, expect dividend increases. Strong balance sheet. Earned the right to be respected for a growth by acquisition story.
John O'Connell, CFAOwned
food stores
COMMENT
Take profits in the Canadian banks? Don't let market conditions dictate your decision making. His knock against the banks is they've done a great job indebting Canadians. Banks are great dividend payers, well run. It's more whether your portfolio is properly balanced. Do you have enough cash to withstand and ignore the ups and downs of the market? TD and RY have been the best at growing in the US, and that's where you want to go.
PAST TOP PICK
(A Top Pick Sep 23/20, Up 80%) He'd buy it today. Best in class in the US. Global. Diverse revenue model. Innovative. Compelling dividend yield. Trades at 10x earnings. A keeper.
John O'Connell, CFAOwned
Financial Services
PAST TOP PICK
(A Top Pick Sep 23/20, Up 30%) Still likes. Difficult stock to own. The written press loves to hate it. 3B people use it every day. Best mousetrap for small and medium businesses to advertise. Trading cheaply because of the negativity.
John O'Connell, CFAOwned
Technology
PAST TOP PICK
(A Top Pick Sep 23/20, Up 96%) 100% he'd buy again today. Earnings are substantially higher than last year, but it's no more expensive. Growth prospects remain outstanding. Rising interest rates will be the wind at its back. US consumer is in good shape.
John O'Connell, CFAOwned
banks
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