PAST TOP PICK
(A Top Pick Jun 19/23, Up 4%)Are we sure it's still cool?

WSJ came out this month with a very glowing article, particularly for working women in their 20s, highlighting an appreciation of quality. Volatility from being a pandemic beneficiary, and then inventory issues. Mostly getting through that. 

Expanding square footage 20-25% this year, will drive increased sales and earnings. 

WEAK BUY

Has done well in recent years, compared to INTC, because of alliance with TSM. Going forward, monitor how TSM is doing compared to INTC. Seems to still be in a good spot. Challenge upcoming with Arm technology in cell phones.

HOLD

Has such momentum, it could probably still outperform.

DON'T BUY

AMD's alliance with TSM leapfrogged it ahead of INTC. Challenge upcoming with Arm technology in cell phones; lost AAPL as a customer because it wouldn't make the desired chips.

WATCH

Some insider buying. Trades at 0.16x sales, about half as much as CFP or IFP. Money-losing right now. Specialty wood products, typically higher margin and more profitable. But not anymore, related to housing market being slow. Cut dividend to protect balance sheet, so company's now pretty secure.

A great turnaround stock with upside once US interest rates come down and housing activity starts to come back. He's keeping a close eye on it.

HOLD

Has held up well at 8x PE, even with nat gas prices low. Pristine balance sheet, using it to invest in equipment that reduces carbon footprint, which gives it a marketing advantage. One of the more volatile among the service companies. Yield is 3-4%.

BUY
Is purchase of CWB a good fit? Down 10% from deal being announced.

In terms of risk, we should be glad it bought in Canada instead of US. Banks that have gone to the US to do acquisitions have been hit and miss. CWB is a durable bank, mainly commercial which is riskier. Interest rates pivoting could certainly help commercial and real estate holdings of CWB.

Cost of capital of the small CWB always high, but now maybe growth can be unleashed as part of a larger bank.

RISKY

Impacted by wage inflation, rising food costs, and consumers spending less on eating out. Valuation is now attractive enough for a speculative (small position) buy.

WAIT
Good time to start a position?

He'd wait a bit. Results being challenged. Nice weather this winter meant fewer collisions and less work for them. Opening new shops. Margins on wages is tight because of inflation. Over 40x earnings, high valuation. Buy closer to a 52-week low.

TOP PICK

Compounding total returns for shareholders over the long term. Over the last decade, delivered 15% annualized return. Company expects NAV to grow 17% compound return for upcoming 5 years. Wider discount than normal right now due to commercial real estate. Yield 0.8%.

(Analysts’ price target is $66.37)
TOP PICK

15-year-old P&C insurance company. Non-standardized specialty insurance, focused on being a low-cost provider. Market share 1.8%. Stock got ahead of itself, most recent dip was a chance to buy. Revenue and earnings growing 18%, trades around 20x PE. Decent growth rate for that valuation. Yield is 0.2%.

(Analysts’ price target is $418.38)
TOP PICK

About half profits come from non-auto businesses such as Skyjack and agricultural equipment. Auto parts are still under-earning from historical norms. 

Market gives a higher multiple to industrial manufacturers than auto parts. So as it becomes more diversified, potential for multiple expansion. He likes the diversification. If it continues to grow the fundamentals, the stock will eventually follow. Yield is 1.5%.

For comparison, MG trades at 7.4x 2024 expected earnings, despite missing expectations and giving weak guidance, and the stock came off. Whereas LNR beat expectations, raised guidance, yet trades at 6.5x.

(Analysts’ price target is $87.50)
COMMENT

Discipline trumps conviction: start trimming 20% up, but buy some bacr or let it run.

BUY

Its forward PE always looks expensive, then when you look back it so far it trumps those estimates, so it looks cheap compared to that PE. It's been this way since 2012. Incredible.

DON'T BUY

It went public in 20129, then soared during the pandemic, but tanked 90% from its peak. At that time, anything internet was beloved like the internet bubble of 2000.