That's right. Belatedly for Canadians, we've seen the S&P/TSX Composite Index join its US equity index counterparts breaking out to fresh all-time highs in the last couple of weeks. He's increasingly encouraged with the durability of this ongoing cyclical bull market, in no small part due to the fact that it has broadened out.
In Q1, we saw 9 of the 11 economic sectors in Canada participate in the rise in the equity indices; 10/11 sectors in the US. Notable laggards are the interest-sensitives of utilities, telecoms, and real estate. 77% of all S&P 500 index members rose in Q1; 69% here in Canada. Historically, pretty strong breadth numbers. The foot soldiers are advancing alongside the generals (Mag 7). This increases confidence in the bull market.
Have to be mindful in the short to medium term that we've just had two back-to-back breathtaking performances by both Canadian and US stock markets. Markets don't move in a straight line. Reversals can be sharp, swift, sudden, and seem to come out of nowhere. One of the tells often is an extreme in sentiment.
He looks at the American Association of Individual Investors survey. Right now, 50% of US investors are bullish, and 22% are bearish. That's a lopsided sentiment. Not extreme, but fairly stretched. Signalling a yellow flag of caution. Could see a garden-variety correction of 5-10% in equity indices at any point.
One of the most valuable brands in the world. Global giant. About 50% off of 2021 highs. Forward growth expectations compounded over 3 years about 16% in terms of earnings, faster growth than what analysts are projecting. This is predicated on margin improvement. Shift to direct-consumer sales is secular tailwind to gross margins. Lots of free cashflow, buying back stock. 23x, cheaper than historical average of 31x. Yield is 1.7%.
He's looking very closely. Hasn't pulled trigger yet.
Secular tailwind is rising adoption of e-commerce. "E-commerce in a box" for small outfits. Increasingly larger enterprise customers. Shifted to a less capital-intensive strategy. Earnings reports are usually a catalyst. Continues to roll out ancillary offerings, which increase take rate. Pullback is a buyable dip.