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COMMENT
It's a nervous time for all investors: removing the monetary stimulus (free money) that has fueled the bull market. Suddenly, central banks are boosting rates to tame hot inflation, and throw in the Russian war. Is this all being discounted already in the market? He doesn't see a recession this year, there will be a slowdown. Consumers remain pretty flush from money saved up during the pandemic. They're still buying cars (inventories can't keep up), for example, and jobs are plenty. Consumer discretionary stocks are now priced like there is a recession. He still like energy stocks and financials are getting interesting. Semis, cars and tech payment stocks look interesting, too. The market has corrected a lot so that valuations have declined to reasonable levels. The few exceptions are megatech, which have fallen, but when they completely capitulate, then we could see the market turn a corner.
DON'T BUY
He can see the temptation in buying it after the sell-off. But no. There's so much competition in streamers, and Netflix must continue spending. NFLX is not cheap in terms of cash flow and valuation, though the stock is overdue for a bounce. He prefers Disney and Paramount which trade at better valuations.
Technology
BUY
He'd buy more, because the valuation is so low. The short-term big risk is the change in the Apple devices that stop Meta from tracking Apple users, which impedes online advertising, which drove Meta's growth ever since it went public. Now, that's being challenged, because Apple has removed the ability. Will this impact their mobile advertising? Meta and Alphabet dominate mobile advertising (he likes both). Watch for their report tomorrow.
Technology
HOLD
We've seen an historic demand spike for fertilizer because of the Russian war, which has cut off supplies from eastern Europe. He likes this stock and space long term, though he took profits recently (the valuation got extended). Don't dump shares nor add. Wait. The price can rise again. Supply constraints will continue for a while, and there aren't many companies in this space. A good company and long-term growth story.
agriculture
HOLD
Prefers it to Linamar because of the valuation and they have more plays on batteries for EVs, which offer growth potential. These stocks move as a group, though it's been a bloodbath for this sector over recession fears. Semis shortages have been an overhang longer than he expected. But car demand remains high with inventories low. They will do well as we transition to e-cars. Also likes Magna.
metal fabricators
COMMENT
He's liked this for a while. Always trade at a discount to NAV, especially steep now. You need to break down their businesses, like Westjet, to valuate the company. No idea how well Westjet has done for them. Is well-managed. You will need to research their holdings. Doesn't own it now. Likes the company.
mngmnt
diversified
COMMENT
Car part companies have been hurt, valuations low. They have a lot of European production which is probably negatively impacting them given the Russian war. A quality company that generates a lot of cash flow. He likes the car parts companies because they can and will transition well to e-cars. But shares have disappointed in the past year.
Automotive
BUY
Hang on. A great, great growth story over the years as they reinvent themselves. They brand and cross-sell like nobody else among videogames, theme parks and merchandise. And now they're in Disney+ streaming. Their last quarter revealed theme park numbers blew him away, despite Omicron shutdowns. They manage well. Stellar acquisitions (i.e. Marvel franchises).
entertainment services
BUY
The rails have pulled back recently over worries of Q1 earnings, but CNE positioned very well in cars, grains and oil/gas. He prefers CP, given their Kansas City acquisition which gives them that north-south network. But CP and CNR will move in tandem. The rails are benefiting from the trucking shortage and emissions concerns. A good hedge to own.
Transportation
BUY
Likes it. Saw a huge move during the pandemic lows, though it's pulled back from highs. Are expanding their fleet, so investors are worried about the costs. Are efficient operators. They cut a deal with DHL. Well-positioned within transportation though more expensive that FedEx and UPS.
Transportation & Environmental Services
