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Today, Paul Gardner, CFA commented about whether KMP.UN-T, CPG-T, MEQ-T, CAR.UN-T, AX.UN-T, BA-T, REI.UN-T, TRP-T, SIA-T, NVU.UN-T, CUF.UN-T, AGNC-Q, AGU-T, SC-T, T-T, D.UN-T, DRG.UN-T, MSFT-Q, DH-T, S-T, TF-T, TCN-T, LNF-T are stocks to buy or sell.

TOP PICK
Leon's Furniture

Thinks they have made a transition by acquiring the Brick. They are going to keep both names in place and he expects it will be great synergies coming out of the supply chain. Will have purchasing power. Most furniture companies trade at 15-17 times and this one is trading at only 10 times. Yield of 3.18%. Should be worth $17-$18 over the next year.

specialty stores
TOP PICK

Focuses on US residential housing, owning single properties in Miami Dade and in Arizona. Trades pretty cheap and they are good at what they do. He believes the US housing is in place and going forward. Yield of 3.82%.

REAL ESTATE
TOP PICK

This is a fund that is about to be turned into a corporate entity. He thinks they are the best in class to becoming experts. This is a more senior lending where you have a lot more loan-to-value protection. They lend on short-term lending agreements to hospitals or apartment buildings where there is less risk.

Financial Services
PAST TOP PICK

(A Top Pick August 23/12. 9%.) 8% bond due November 15/18. Doesn’t own this anymore but does own the stock. It’s all about their Madagascar mine that is going into production this year and next. Expect it’s a better play using the equity which trades at a discount to NAV. He could see a 25% upside in the stock.

integrated mines
PAST TOP PICK
DH Corporation

(A Top Pick August 23/12. Up 33.37%.) Have made such a huge effort over the last 2 years to diversify away from cheques and are focused on the back office for mortgage lending and financial technology that feeds into banking credit in the US. Still thinks there is some upside over the medium term.

other services
PAST TOP PICK
Microsoft Corp

(A Top Pick August 23/12. Up 6.38%.) Has pared some off his holdings. Businesses are going to have to go through a cycle upgrade whether they like it or not so he is still holding. Great dividend. He can see $40 in the next 12-18 months.

computer software / processing
N/A

Interest rates. The Fed has released so much money supply through buying the outstanding bonds and literally quantitative easing the whole situation. That was the last 3 years. Now that we are in healing mode and reaching normalization of the economy, you have to adjust for higher interest rates. The bond market has already adjusted for higher rates. With the employment numbers out last week, the Fed is going to take out its buying program of 30 year bonds.

Unknown
COMMENT

Have some really solid properties in Germany, however you are not only dealing with the currency perspective, but also with possible interest rate increases. Canadian REIT sector took a hit because of rising interest rates and this could be a danger in this case as well. Also, the valuation is still not incredibly cheap.

REAL ESTATE
COMMENT
Dream Office REIT

Owns properties in Alberta and have diversified into Ontario so it is a better balanced REIT in the last 3 years. Has never owned because of the quality of the properties, but more importantly, because of the management contracts which are based on asset growth while he prefers profitability.

property mngmnt / investment
BUY
Telus Corp

Telco landscape is incredibly confusing. Government doesn’t know what it is doing in that it wants more competition but doesn’t want to open up the forum. Telus is “best in class” in this industry. Got hit with the interest-rate movement. He feels it is more compelling now that it’s come off 10%-15%. It is still a very, very consistent free cash flow yield industry regardless.

telephone utilities
SELL

Sold his holdings a couple of days after the announcement about the Loblaw’s (L-T) take over. If you own, he would Sell now.

specialty stores
DON'T BUY
Agrium

Their retail division is kind of saving them because they are not as concentrated as something like Potash (POT-T). Have great assets and are helped because of their diversification of the retail side. He would still stay away because there are probably global players that are going to invest out of these kinds of stories. Trading at 12X earnings so it is not incredibly cheap.

chemicals
BUY

Mortgage backed security that basically borrows at the Fed rate and then lends out. Has been wonderful over the last 3-4 years. Not only has the housing market recovered but the curve has been very steep. There is now a threat of higher interest rates which causes stress on their leveraged balance sheet. The housing is improving everyday and that helps because you are getting a really healthy 12%-14% yield. Decent entry point.

Financial Services
COMMENT

In Québec on industrial, retail and office. Have done a great job of focusing on that region. Trying to diversify in Calgary and are focusing also in Montréal. Trades at 16X AFFO so not incredibly cheap but he feels they are not only going to keep their distribution, but will keep growing. Have a terrific portfolio and good management. He prefers being defensive by going more into apartments and assets that are really lowering their balance sheet and not increasing it.

investment companies / funds
WAIT

Apartment buildings in Alberta and BC and specifically in Nunavut and Fort McMurray. Got out of the nursing home business about a year ago and are now more focused on apartments. At this price, it is a little more compelling. The company reports on Aug 13/13 and he would wait to see what is reported.

investment companies / funds