Today, The Panic-Proof Portfolio (Stockchase Research) and John Zechner commented about whether BCE-T, META-Q, BTE-T, NTR-T, BA-N, CMG-N, SBUX-Q, CSU-T, MRE-T, DOO-T, PPL-T, RCI.B-T, RY-T, TD-T, BNS-T, BMO-T, CS-T, MDA-T, BX-N, CCL.B-T, HD-N, V-N, T-T, SEE-N, GDEN-Q, INSW-N, SIG-N are stocks to buy or sell.
The current volatility doesn't totally surprise him; the market was in a risky position. We haven't hit bottom, because too many people remain too heavily invested in the market. The next move in interest rates will be lower and the economy is weakening. Today, Home Depot reported the latter, though investors are pricing this in. Starbucks, UPS, McDonald's, Airbnb, many companies are signalling a weaker economy, but has the marketed discounted this in valuations? He predicts a short, shallow recession, and a 0.5% rate cut in September to catch up to other central banks in Canada and Europe. This will ultimately benefit investors, because lower rates will support higher valuations. Buy on weakness.
Telcos have acted poorly, so he's become cautious here. They have a higher PE and they used to earn this premium valuation because of ancilliary operations had growth, like technology. Their Telus International is a disaster. Telus faces more competition. BCE is very cheap and Rogers will grow after buying Shaw, so Telus is ranked third.
Leg into this slowly. Expect a few more challenging quarters, while their PE is a little high. Even rate cuts won't trigger a bounce in the housing market. In the US, the mortgage rate has fallen from 7% to 6.5%, but the 30-year mortgage is under 4%. A better leading indicator is the price of lumber.
SIG has over 2600 retail jewelry stores through North America and Europe. It trades 6x earnings, under 2x book value and supports a robust 32% ROE. Its dividend is backed by a payout ratio under 10% of cash flow. We recommend setting a stop-loss at $60, looking to achieve $97 -- upside potential of 28%. Yield 1.3%
(Analysts’ price target is $120.40)