Today, The Panic-Proof Portfolio (Stockchase Research) and Alexander MacDonald commented about whether CNR-T, BNS-T, OTIS-N, JPM-N, SOFI-Q, AVGO-Q, NVDA-Q, CB-N, IFC-T, TD-T, DIS-N, ABT-N, MRK-N, BCE-T, MDLZ-Q, GOOG-Q, RTX-N, CNQ-T, SU-T, DOL-T, DLTR-Q, DG-N, V-N, SJ-T, CCL.B-T, JNJ-N, SPOT-N, NFI-T, WELL-T, EQX-T, APA-N, ING-N, CHP.UN-T, RGS-N, ADBE-Q, GSY-T are stocks to buy or sell.
Yes. Looking at that index, equity markets outside the US have been down 8% since September. Compare that to the S&P 500, which is up 5% since election day and about 25% YTD. Significantly different performance. Why the difference? We just had Q3 reporting season in the US, and about 50% beat on revenue expectations, and about 75% beat earnings expectations. Fundamentally, things are still going quite well for US equity markets.
Still, listening to the conference calls, there is some concern about the US consumer. Specifically, the lower-income consumer. People have been spending Covid savings, so savings rates now may not be what they used to be.
Also concerns about whether US equity markets are getting ahead of themselves since the election. The new administration has talked about lower taxes and deregulation, but tariffs keep coming up. Those will hurt imports into the US and will impact a subset of US companies.
He cautions investors against trying to time the markets as a whole. A good time to focus on quality companies, ones you know will be there through a full economic cycle. These things come and go. Few things are inevitable in investing, but you know that at some point we're going to have a recession. You want to own companies that, going into that, are going to be strong with conservative balance sheets.
By trying to time things, you can miss some of the best days. For example, the day right after the election was one of the best days we've had all year. If you were sitting out because of uncertainty going into that election, that would have significantly impacted your returns.
Too small for his portfolios. In Canada, rolling up medical practices with a strategy of using technology to reduce administrative burden. In US, has a GI line, as well as virtual mental health and women's care; may spin off the latter two. Valuation ~40x forward PE, rich. He can't get behind that valuation, but progress will be interesting to watch.
Pulled back based on underlying demand. Businesses are pretty steady-eddy. Infrastructure buildout would help, but questions surround new US administration. Interest rates ticking up means home renos have ticked down. Don't step in here.
Hurricanes (needing lumber replacement) can't be predicted from one period to the next. Investors want to see predictable, recurring revenue and cashflow.
Following recently released earnings showing a 26% increase in operating earnings and a 16% increase in loan originations, we reiterate the leader in Canadian sub-prime loans as a TOP PICK. It currently trades at 11x earnings, 2.5x book value and supports a 25% ROE. We note that their debt is rising modestly, so we recommend trailing up the stop (from $150) to $165, looking to achieve $235 -- upside potential over 30%. Yield 2.5%
(Analysts’ price target is $235.56)