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TOP PICK
Stockchase Research Editor: Michael O'Reilly We once again reiterate AD.UN as a TOP PICK. It generates about 85% of its cashflow from US operations (the rest in Canada), in a well diversified portfolio of assets. It trades at 6x earnings compared to peers at 8x and trades at just over 1.1x book value. It increased its dividend again in September (up 6%), creating a $1.32 annualized pay out, which is backed by a payout ratio under 60% of cash flow from operating activity. We continue to recommend a stop loss at $15.50, looking to achieve $22.75 -- upside potential over 21%. Yield 7.2% (Analysts’ price target is $22.71)
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TOP PICK
Stockchase Research Editor: Michael O'Reilly BBWI, an offshoot of the previously named L Brands (which separated from the Victoria's Secret line) is reiterated as a TOP PICK. Recently reported earnings beat analyst expectations by over 50%. Its mostly domestically sourced product line is helping it to avoid supply chain issues going into the holiday sales season. It trades at 13x earnings compared to peers at 26x and is using cash to pay down debt. We continue to recommend a stop loss at $68.50, looking to achieve $90.00 -- upside potential over 25%. Yield 0% (Analysts’ price target is $90.06)
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TOP PICK
Stockchase Research Editor: Michael O'Reilly As one of the largest steel producers and metal recyclers in the US, we reiterate STLD as a TOP PICK. A move by the current Administration to bolster infrastructure spending is expected to help create record earnings as management guidance was boosted. Domestic steel demand from the automotive, construction and industrial sectors is expected to remain strong. The company bought back over $1 in stock this year. It trades at 5x earnings compared to peers at 16x and has a PEG ratio under 0.5, showing good value here. It pays a decent dividend, backed by a payout ratio of under 15% of cashflow. We continue to recommend a stop loss at $50, looking to achieve $79 -- upside potential over 25%. Yield 1.69% (Analysts’ price target is $78.77)
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PAST TOP PICK
(A Top Pick Feb 25/21, Up 23%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with EMA is progressing well and has achieved our $62 objective. To remain disciplined, we recommend covering half the position and trailing up the stop (from $52) to $58.
mngmnt / diversified
COMMENT
Inflation. He hasn't changed his tune on that. Investors have benefited from loose monetary policy that's created asset inflation, in both stock and real estate markets. Now seeing cost push inflation caused by supply chain disruptions. A lot of that will flow through. Fed and BOC have dropped the word "transitory", but he hasn't changed his view. We'll end up not so far from the 2% target that central banks are looking for. The bond market agrees with him. If inflation were the big worry of the day, bond market would show a much steeper yield curve, but it's not.
Unknown
COMMENT
How long will it take this environment to play out? It's already gone on longer than anyone thought, so it's difficult to pinpoint. Are we going to get further into the Greek alphabet with variants? Things aren't back to normal. We have to be patient. Position for the future, and be patient for things to work out.
Unknown
COMMENT
Sector positioning. Barbell approach has worked for the last couple of years. Everyone was surprised in Spring 2020 that markets reacted so favourably to the at-home-type stocks. He set up a mix of growth stocks with pricing power and multiples of GDP along with value stocks like industrials, banks, and materials that do well in an inflationary environment.
Unknown