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Today, The Panic-Proof Portfolio (Stockchase Research) and The Weekly Buzzing Stocks by Billy Kawasaki commented about whether EMA.TO, TSM, AMD, FSLR, LULU, SLB, SLF.PR.D.TO, GWO.PR.P.TO, PWF.PR.E.TO are stocks to buy or sell.

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TOP PICK
Stockchase Research Editor: Michael O'Reilly

We reiterate this Canadian based preferred share offering by Power Financial.  The parent company POW recently reported EPS increasing by 138%.  Cash reserves at the parent are growing, while debt is retired and shares bought back and their stock trades at 10x earnings and 2x book value.  We continue to recommend a stop at $19, looking to achieve $25 -- upside potential of 16%.  Yield 6.4%

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TOP PICK
Stockchase Research Editor: Michael O'Reilly

We reiterate this Canadian based preferred share offering by Power Financial.  The parent company POW recently reported EPS increasing by 138%.  Cash reserves at the parent are growing, while debt is retired and shares bought back and their stock trades at 10x earnings and 2x book value.  We continue recommend trailing up the stop (from $17.50) to $19.00, looking to achieve $25.00 -- upside potential of 17%.  Yield 6.3% 

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TOP PICK
Stockchase Research Editor: Michael O'Reilly

We reiterate this Canadian based preferred share offering by SLF.  The parent corporation has been prudently using some cash reserves to retire debt and buy back shares.  The parent trades at 13x earnings, 1.7x book value, and supports a 13% ROE.  We recommend trailing up the stop (from $15.50) to $17.00, looking to achieve $25.00 -- upside potential of 31%.  Yield 5.8%

 

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PAST TOP PICK
(A Top Pick Nov 21/23, Down 10.8%)Stockchase Research Editor: Michael O'Reilly

Our PAST TOP PICK with SLB has triggered its stop at $47.  To remain disciplined, we recommend covering the position at this time.

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PAST TOP PICK
(A Top Pick May 21/24, Down 7%)Stockchase Research Editor: Michael O'Reilly

Our PAST TOP PICK with LULU has triggered its stop at $300.  To remain disciplined, we recommend covering the position at this time. This result in a net investment loss of 10%, when combined with our previous buy recommendation.

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PAST TOP PICK
(A Top Pick Apr 11/24, Up 20.9%)Stockchase Research Editor: Michael O'Reilly

Our PAST TOP PICK with FSLR has achieved its target at $222.  To remain disciplined we recommend covering half the position at this time and trailing up the stop (from $140) to $170.

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TOP PICK

Emera Inc. is a geographically diverse energy and services company headquartered in Halifax, Nova Scotia, with approximately $38 billion in assets and 2022 revenues of more than $7.5 billion. The company primarily invests in regulated electricity generation and electricity and gas transmission and distribution with a strategic focus on transformation from high carbon to low carbon energy sources. Emera has investments in Canada, the United States and in three Caribbean countries. Emera’s common and preferred shares are listed on the Toronto Stock Exchange and trade respectively under the symbol EMA, EMA.PR.A, EMA.PR.B, EMA.PR.C, EMA.PR.E, EMA.PR.F, EMA.PR.H, EMA.PR.J and EMA.PR.L. Depositary receipts representing common shares of Emera are listed on the Barbados Stock Exchange under the symbol EMABDR and on The Bahamas International Securities Exchange under the symbol EMAB. Additional information can be accessed at www.emera.com or at www.sedarplus.ca. Social media mentions are up 33% in the past 24h.

COMMENT
Crude near lowest in 2 months.

Complete elimination of any political risk premium that was in the oil price. About 2 months ago, he started getting far too many interview questions about whether oil was going to hit $100. As a contrarian that made him nervous, so he raised quite a bit of cash (about 33%). And he's been actively spending that given the selloff.

Heading into a key OPEC meeting in a few weeks. His best read on the situation is that they'll extend the voluntary cuts through to the end of this year. Still concerns about a weak China, whether the Fed will cut or not, and how is the US consumer holding up. That means sharper than average inventory draws beginning next month. 

Given these headwinds plus seasonal weakness, high $70s is pretty good. Energy is up 20% YTD. As we look to the second half of this year, sees demand seasonally increasing, OPEC continuing cuts. Falling inventories are bullish for oil. Possibility of $90 Brent by end of 2024.

COMMENT
Natural gas.

Bullish heading into 2025. LNG Canada starting to ramp up and will start taking nat gas in the next month or so. Outlook remains solid.

COMMENT
Gas demand in US surprisingly weak.

Weekly numbers that come out are typically of low quality. Last year, underestimated US demand by 400K barrels a day. So he waits for the monthly numbers and wouldn't be surprised to see an upward revision. 

No tangible evidence that the consumer is faltering. We hear all these stories about trade downs to Walmart and people buying fewer Big Macs, but if you look at miles driven, the consumer seems fine. Demand is not shooting the lights out, but it's fine.

COMMENT
Concerned that upcoming capital gains change will impact share buybacks?

He still sees enduring religion of returning free cashflow to investors, irrespective of tax changes. It's likely that people will do some estate planning by the deadline and take some gains off the table. But he doesn't see the impact occurring on share buybacks.

Right now companies are awash in free cashflow, not meaningfully growing, and paying down debt. There's really nothing to do with that cash except give it back in the form of dividends or buybacks. Investors very clearly want share buybacks.

We've had a bit of a rerating. Stocks aren't trading at 2x cashflow, now more like 10-12x free cashflow yield. Still sees meaningful upside at $80 oil and $4 gas. Real power in the next couple of years is the compounding effect of buying back 10-15% of outstanding shares every year. Three to four years from now, the remaining shares will be so much more valuable.

DON'T BUY

Some people own it for M&A takeover potential. He doesn't like to do that. It's a market where interest in small caps remains very low. Not hitting enough radar screens currently. Pursuing growth, so more modest cashflow.