COMMENT
BOC hike today and Fed decision next month. Pretty well telegraphed, so no surprise today, or what's going to happen next month. Consensus was for 50 bps today.
COMMENT
Where and how to invest now? Geopolitical uncertainties muddy the waters for central banks. Markets have been volatile for the last few years. Don't bet on one thing. Be very well diversified, geographically, by sector, and also by investment type with growth, value, and income stocks. That mix will let you sleep at night and stay invested in the market.
COMMENT
Areas to avoid? He's very cautious on some of the high cyclicals, specifically the commodities that have gone parabolic over the last few months. This year has seen a transition from growth to value. So now some of the value names are higher than he's comfortable paying, and some of the growth names have tumbled. There's always an opportunity somewhere in the market. As long as your portfolio is diversified, you can shift your allocation to take advantage of opportunities.
DON'T BUY
Depends on new listings and revenues through data feeds. Entirely reliant on its technology. Valuation is 18x earnings, but outlook for growth is flat over next couple of years. Competitive pressures from the US. He's wary. Stay away.
STRONG BUY
Good hold for the dividend? Really likes. Attractive valuation. Dividend is very sustainable and has grown over time. Regulated, so interest-rate sensitive. You have to skew towards interest-rate sensitives that can grow. AQN fits that profile. Really good growth profile, solid management.
HOLD
Markets have been volatile. Stick with it. Bank valuations across NA are around 11x earnings, pretty reasonable. All banks have plans for excess cash they've built up. CM growth profile is not as strong as its peers, so it always trades at a lower multiple. He prefers BNS and TD.
COMMENT
Yield curve's effect on banks. Banks that have more of their income dependent on interest from loans depend more on the yield curve. Canadian banks have a mix -- interest from loans, plus income from wealth management, insurance, and other services. So Canadian banks are less sensitive than US banks, especially regional banks, to the yield curve. With the Fed planning to increase interest rates, banks that are more interest rate sensitive will benefit more from the rising yield curve.
WEAK BUY
A pocket of value in the sector, life insurance is the cheapest in the group. Lifecos definitely have room for multiple expansion and earnings growth. His preferred name is GWO, with a more mature M&A market focus. MFC is more focused on EM.
COMMENT
Trading pattern of sells at end of day depresses price, looks suspicious. The pattern can be misleading, as it's usually mutual funds and money that's managed on behalf of the banks. Don't get too caught up in that. Anything nefarious will be sussed out pretty quickly by the data feeds and regulators.
BUY
A pocket of value in the sector, life insurance is the cheapest in the group. Lifecos definitely have room for multiple expansion and earnings growth. His preferred name, with a more mature M&A market focus, whereas an MFC is more focused on EM.
BUY
Beat on top and bottom lines, yet price still down. Majority of income from US. Strong economics, well run, high quality. Valuation got ahead of the fundamentals, nothing wrong with the company. Solid business, good management team. Historically, a good compounder.
BUY ON WEAKNESS
He prefers JNJ, CVS, and ABT. If you own it, don't sell. Otherwise, don't buy now. Well run, but growth profile has lagged. Valuation got hit. Wait for a pullback.
DON'T BUY
IT services company, majority of revenue from government. Big acquisition added debt. Covid benefit has moderated, cashflow has been hit. Good business economics, great free cashflow, attractive valuation. In the space he prefers CGI, with a more global platform, free cashflow yield of 6%, less focus on government work.
BUY
In the space he likes CGI, with an attractive global platform, free cashflow yield of 6%, and a mix of government and private enterprise contracts.
COMMENT
Buy the ADR or directly? ADRs are a great way to access foreign markets without paying unreasonable commissions. Lots of institutional investors own the ADRs as well.