Today, Stockchase Insights and Ryan Bushell commented about whether PPL-T, ALA-T, FRU-T, BEP.UN-T, NFI-T, TOU-T, CSH.UN-T, AQN-T, BNS-T, NPI-T, ARX-T, MFC-T, ENB-T, SIS-T, CAR.UN-T, TRP-T, TD-T, SPB-T, AEM-T, TGH-X, PXT-T, MRC-T are stocks to buy or sell.
We would consider it a nice little small cap, and priced well at 11X earnings. One analyst covers it. It is a competitive, cyclical business but TGH has managed to grow consistently and keep its balance sheet strong. Gross margin is 18%. Net 7%. Tariffs may be a concern, and in its breakdown the autosector is a big customer which is another cyclical/tariff risk. Insiders own 30% which is good. We could see it owned as part of a small cap basket along with several other small companies.
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Tech themes that created investing opportunities:
Microprocessors
The development of the microprocessor, and semiconductors, truly advanced global technology. Suddenly, personal computers became commonplace, resulting in higher productivity and significant cost savings to customers. The world, and particularly North America, went from building things to becoming a service economy, with resulting loftier profit margins. Companies such as Intel Corp., which became the biggest semiconductor company in the world in 1992, saw their stocks soar. Intel stock rose 11 years in a row from 1989 to 1999, including a 95 per cent return in 1992 and a 132 per cent return in 1996. International Business Machines Corp. (IBM) was another big winner from this trend, though not to the same degree.
The internet
This development is likely much more widely known, since everyone uses the internet now. We know about the dotcom days and how nearly every company in the world was scrambling to make sure they got a piece of the internet action. Certainly, the ‘net helped companies drive costs down and it opened up the entire world as potential customers. Amazon.com Inc. is the poster child of stocks in this era, with a 966 per cent gain in its stock in 1998. It then crashed hard (80 per cent) in 2000, but is up about 250-fold since then.
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During the Trump tariff sell-off yesterday, TD may have been the best performer among the Big Five banks, partly because shares are down far already, but also because they are diversified outside Canada. The more Canadian-exposed banks got hit worse. Nobody knows the impact of tariffs, but TD is in a better position than peers.
He remains a big fan of the company. They've increased margins and revenues. The tariffs have impacted shares. He isn't panicking but rather buying on weakness, including yesterday. Volatility will continue. The US makes up 33% of sales, and because SIS has a lot of manufacturing in the US so those sales should conform with the tariffs. If FDA-approved products, like elevators are exempt, that would raise the US percentage. Ultimately, SIS will navigate tariffs which won't last forever.
Owns a serious position. Happy that shares have returned to all-time highs after capital projects are now online as they raised the dividend. The only potential impact of tariffs would be spot volumes on the mainline flowing into the US. Would be minor pain. And we don't know how long tariffs will last. Cooler heads will prevails, especially in energy which are so integrated between Canada and the US.
The bar wasn't high for them last year, but they still didn't exceed it. Wind performance remains an issue and the ambiguous management change caused unrest. Also, they had a problem with a sub-contractor in Taiwan where a death (not their fault) created bad press. They just hired a new CEO, who came from CNQ's board and Total, who will maintain the 7.3% dividend and will hit milestones in offshore wind (not exposed to the US, which is good). He likes the new CEO. They are in the building/development cycle, which they are good at. It's very positive. He would make this a top pick.
Share have gone done, but actually rose in the second half of 2024. The new CEO is unknown, so he's TBD with the market. But so far, there's better performance in key metrics. It takes time to turn around a large company, like 2, 4 or even 10 years. But there's little competition among Canadian banks and you collect a nice dividend as you wait. He's happy to stay the course.
PXT is targeting average production of 45,000 boe/day in 2025. Capital expenditures will be $300M. Cash flow $445M and free cash flow $145M after dividends. This is essentially down a fraction from Q4 production results. The balance sheet is still strong and cash flow good. The dividend can still be paid IF the company wants to. It has renewed its share buyback. Essentially, analysts comments are reflecting 'lacklustre growth' and this forecast is not likely to be a catalyst for the stock, even though it remains very cheap on all metrics.
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