COMMENT
Market Outlook Inflation has to be on your radar, but he thinks it is transitory -- caused mostly by supply chain interruptions. Wage inflation seems to be more pronounced in the lower wage category, which likely needed it anyway. This means we will likely pay more for food service, for example. When production comes back up, he expects we will return to a deflationary market. The world is awash in liquidity which will cause prices in general to return. There are opportunities in many Canadian sectors such as health care, small mid-caps, lumber and other industrials. Yet these groups are producing record results.
STRONG BUY
Even though lumber is a quarter of their business, utility pole replacement is a large part of their business along with railway ties. If you normalize lumber prices, the stock is trading at an all time bargain at 13x earnings, with lots of free cash flow and the company is buying back shares. They could boost the dividend if they wanted to and are looking at acquisitions. One of the highest quality stocks trading at great value. He owns it and would it to put it away.
STRONG BUY
A very high quality company that is generating high margins and great cash flow. They have owned it a long time. Recent results showed margins were recovering. They have upgraded the quality of their wines allowing them to reach higher price points. Their estate winery business is booming and they are generating record retail sales. This should continue. It is really cheap here and the company is buying back large volumes. This is a great area to buy as there is very little downside here.
HOLD
They have owned this in the past. It went no where for decades. The maple syrup side, which they entered about six years has been a disappointment and has been volatile. A safe and boring company. Not a lot of downside. You can milk it for the dividend, but there is not much upside.
BUY
Although it has not gone up as much as the high flyers, it has not gone down as much these days. Its growth has been by acquisition in the software management space. Very slow growth and there is a slow migration to on-going SAS recurring revenues. He loves their margins, however. It is trading in a fair range here. Unexciting, but a stable company.
STRONG BUY
One of two he owns in the health care sector. Digitization within health care has only just begun. The last quarter beat expectations. They announced a large deal with Sun Life on mental health coaching. This alone could be $40 million in annual revenues. Things are going in the right direction and will exceed expectations next year. A very good entry point here.
STRONG BUY
An excellent entry point. They are now the biggest company in the institutional pharmacy space in Canada. They supply medication to long term care facilities. They have 23% of the market share in Canada. They only really have one competitor, Shoppers Drugmart, who are really focused on retail customers. The stock is really cheap here and a long runway ahead.
BUY
They were a strong activist shareholder a few years ago and now hold a seat on the board. The transformation is nearly complete and recent earnings proved it is working, with a record order backlog and expanding margins. They expect solid earnings when reported in January. At some point it could be an acquisition target, where he thinks it would fetch 3x its current value. You have to be patient. Very little downside.
PAST TOP PICK
(A Top Pick Jan 25/21, Up 5%) The stock had a great run up over $60 and it has had a pullback. It is 2nd largest maker of instant lottery tickets in the world. There are only three players in North America. One of their highest conviction stocks they own. They had a rare earnings miss recently, because of high demand that forced sales into the next quarter (which should be a record one). A great time to buy as government continues to need revenues through gaming. They just added to their position in the high $30s and should be back into the $50s soon.
PAST TOP PICK
(A Top Pick Jan 25/21, Down 74%) Focused on clinical data and connectivity to health clinics. They just announced a large deal to help patients connect with health services in Ontario. They are rolling out a virtual care service to long term care homes. They have guided to $90-$100 million in revenues, which would translate to trading 1x revenues. The cheapest of all public stocks in this space.
PAST TOP PICK
(A Top Pick Jan 25/21, Down 53%) They are leaders in wireless and satellite networks. Travel restrictions and infrastructure spending of customers were slowed during the pandemic. They now report a record back login orders. Insiders have bought $50 million in shares recently. It trades at only 7x earnings compared to peers at 14x.
BUY
He was buying it in the high $20s and it was a previous TOP PICK. The company is a global manufacturer of storage and handling ag products. They have a record backlog. Steel cost increases have been managed well. Their debt is a bit high, but the company is obsessed with reducing leverage. The acquisition binge they were previously on has taken time. This is a great entry point.
COMMENT
Top Cdn Bank? TD and BMO are the two he recommends as they recently beat earnings expectations. He likes them both for their US growth opportunity. BMO raised their dividends significantly. Very safe stocks to hold.
COMMENT
Top Cdn Bank? TD and BMO are the two he recommends as they recently beat earnings expectations. He likes them both for their US growth opportunity. BMO raised their dividends significantly. Very safe stocks to hold.
PARTIAL BUY
Not one he has owned being a value investor, but since it has fallen by half they are picking away at it. Really good value as they are growing sales and margins. Thinks the sell off is over done.