Today, The Panic-Proof Portfolio (Stockchase Research) and Martin Cobb, ASIP commented about whether CNQ-T, GOOG-Q, TTNDY-OTC, VOD-Q, ARM-Q, DIS-N, ATZ-T, BCE-T, IVN-T, MA-N, V-N, ATRL-T, EA-Q, SNN-N, SAP-T, L-T, RHM-DE, BHP-N, HSBC-N, TD-T, DE-N, ELF-T, NOG-N, DFH-N, APA-N are stocks to buy or sell.
The TSX keeps creating highs. He's been asked, Why own the TSX instead of the U.S. during tariffs? People were getting fear fatigue over tariffs, getting used to them and moving on with their lives. But we will still see pain and uncertainty in Canadian employment and mortgages. That said, markets still bounce or fall over what Trump says on a given day. US consumers will have to pay more for things made around the world, given tariffs and drive inflation. His greatest concern is that companies are not hiring because of uncertainty caused by tariffs. We're probably already in a recession. GDP per capita is flat at best, and the rest of this year could be tough for Canada.
It's the best Canadian bank performing so far this year, but the worst in 2024. Their US problems are not yet behind them (they have to work through the asset cap, part of the penalty for money laundering). They have limited growth in the US, but also won't need capital to grow. So they could buy back shares. TD trades at a discount, so he likes this for the long term.
The largest miner today, in iron ore and copper. Mining is risky; it takes a long time to see if whatever you dig out of the ground will sell. He likes BHP's diversification. Iron ore is in safer countries, copper not, so BHP is attractive in this way. There remains good demand for copper. Trades at 12-13x PE and nice balance sheet. but a little risky.
The US is their biggest market where there's overcapacity in milk-cheese, so SAP has to work through that. They used to earn 10% operating margins there, but now it's a loss. But if they recover there and continue to grow in Canada and internationally, this will look cheap. The Canadian market is more about retail, not food service in the US, so more stable with more pricing power.
They have a lot of sports titles. They lost FIFA, but have their own soccer franchise, plus baseball and basketball. Sports are steady as opposed to companies depending on a few hit games. Ultimately, someone will buy them out, like Netflix or Amazon or Apple, who could pay twice the multiple.
In recently reported earnings, APA indicated they expect operational efficiencies to result in $130 million in cost savings. The company has been prudently using cash reserves to aggressively retire debt and buy back shares -- all while providing a good dividend supported by a payout ratio under 50% of cash flow. It trades at 6x earnings, 1.1x book and supports a 25% ROE. We recommend setting a stop-loss at $13, looking to achieve $23 -- upside potential of 33%. Yield 5.8%
(Analysts’ price target is $22.89)