Latest Stock Buy or Sell? Make More Informed Decisions!
Today, Zachary Curry and Stockchase Insights commented about whether STN-T, BRK.B-N, SBUX-Q, V-N, BN-T, SU-T, VET-T, BCE-T, CNQ-T, GFL-T, EMA-T, BAC-N, CSU-T, TOU-T, RY.PR.A-T, SHOP-T, PFE-N, TM-N, LLL-T, COST-Q, TD.PR.T-T, AXP-N, CSCO-Q are stocks to buy or sell.
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Very prominent brand (visible across Canada). Stock performance strong. High debt levels a concern. Unsure of future business given leverage. If debt falls, would expect better returns. Cheapest valuation in waste management space, however investors have to weigh risk of debt levels. Earnings very stable (sticky customers) with steady demand.
Very string company. Excellent earnings in 2023. Very strong management team. Debt levels falling - have pledged 75-100% return of cash flow to investors. Strong oil prices very good for business. Expecting higher dividends going forward. Oil sands asset very long life that doesn't require exploration costs. Overall a very great business.
Media company with oligopoly like market. However, business requires high spending on assets to maintain business. Would like to see dividend growth rate reduced to reduce debt. Falling interest rates would be good for business. Would rather own companies that are less capital intensive. Better names for investors out there.
Very strong business with long life assets. Oil sands not risky due to zero exploration risk. Turnaround story with new management team. Improving costs and safety record. Debt levels are falling - good for return of capital to investors. Shareholders will be rewarded going forward. ~5% dividend yield very safe.
SBUX is trading at 22.4x Forward P/E, at the lower end compared to historical valuations that range from 22.0x to 32x over the last few years.
The share price has been relatively flat in the last few years due to a drop in valuation multiple from 30x, and SBUX has struggled to grow earnings in recent years, largely due to a slowdown in China’s market. Every now and then, SBUX brought its founder back to run things more efficiently. SBUX is still a great franchise SBUX is not a screaming buy, but it looks attractive here given it is trading at the lower end of historical valuations. The company is expected to grow its topline by 9% over the next few years. We are okay to add some here.
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It is a challenging task to just pick 1 stock. Of course, we would never advise any investor to do so. That said, if we HAVE TO pick only one stock to invest the entire portfolio in 10 years without worrying too much about the volatility of the market, we think BRK.B would come to the top of the list due to its fortress balance sheet, a portfolio of well-diversified businesses, and slightly undervaluation. We think BRK.B could do well beyond Buffet, and has a decent chance of doing well against the S&P 500 (BRK.B tends to outperform in bear/flat market, and underperform in bull market).
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EPS of 82c missed estimates of 86c; revenue of $1.24B was 1.4% better than estimates. EBITDA of $194.6M was 4% short. The dividend was increased 7.7% and a very large battery contract was announced. EPS was flat year over year. The CFO is also retiring. Backlog is $6.3B, up ~7%. Not a perfect quarter, but the contract and dividend bump are positive signs. We would consider the outlook still quite positive overall.
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Market Update:
The US economy grew at a slower pace than expected, increasing at a 3.2% annualized rate, slightly missing expectation of 3.3%, driven largely by the downward revisions of the private inventory investments. On the other hand, the key Federal Reserve inflation rate, the core Personal Consumption Expenditures (CPE) price index, indicates a price pressure in January, in line with expectations, keeping a June rate cut on the table. The Canadian dollar was 73.76 cents USD. The U.S. S&P500 ended the week up 0.4%, while the TSX was up 0.7%.
A lot more greens this week than reds. Energy added 5.5%, while information technology and materials added 2.1% and 1.4%, respectively. Consumer discretionary and industrials edged up 0.2% each, while financials remained flat. Real estate edged down 1.7%, while consumer staples ended the week slightly down 0.4%. The most heavily traded shares by volume were Cenovus Energy, Athabasca Oil Corporation, and Baytex Energy.
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Return on capital predictable, but replacement cost of assets very high. Good for defensive investors, but not going to appreciate capital at high rate. Lots of capital required to grow business creates situation of low returns. Politicians and consumers putting pressure on margins of business. Falling interest rates good for the business (high debt load in business). Overall, better options for investors out there.