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COMMENT
Market Outlook The market is very sensitive to news flow about COVD-19. Some of the states are reporting rising numbers and President Trump is also talking about putting in new tariffs. That is never good. Q2 was in lock down for much of the economy, so we should see some positive growth in Q3 and forward. She wonders if this will lead to consumer confidence and spending. The market will continue to be sensitive to news about a vaccine, she thinks. There has been a lot of positive news early on and hopefully in early 2021 there may be a viable vaccine candidate that can be widely distributed.
COMMENT
The outcome of a merger with United Technology, which had previously spun out their elevator division. She owns this as she held United previously and will continue to hold it. COVID-19 has had a negative impact on their airplane engine division. With lower flying time, there is less repair work required as well. The defense space is still doing well. Eventually air travel will resume and will remain attractive long term.
Defense
BUY
US pipeline issues? We own ENB and have for a few years. Lower oil prices impacted their business, but they are financially sound. Over 95% of their capacity is contracted. Some lower production out of western Canada may impact short term earnings. Eventually Line 3 will be completed and Line 5 will be refurbished. With a yield above 7%, it is an attractive hold.
oil
gas pipelines
HOLD
She still owns YUM. Their brand are Pizza Hut, Taco Bell and KFC. In China, they have a large presence -- it represents about 30% of their revenues. Since most locations focused on drive-thru they are doing okay. There is still good growth opportunities overseas and they are looking into India to expand.
food services
BUY
They have owned this for a number of years. She has been in regular contact with their management since COVID-19 lock downs. Only about 10% of their income comes from long term care. Longer term this sector is attractive due to an aging demographic. They have handled the crisis well. She is not sure if short term growth will continue as most locations are not allowed to offer tours presently and vacancy rates are increasing as a result. She has been putting new customer money into Chartwell over the past few weeks. Yield 6%
property mngmnt
investment
HOLD
Frustrating stock! Fundamentally, the company's new CEO has been right-sizing operations and with the virus this year premiums collected have had a hard time finding yield. This has hurt the stock in the first quarter. The price to book is 0.6 times -- very attractive. She thinks this is a good hold and you have to think longer term. She does own this.
insurance
COMMENT
She prefers to own a Canadian telco for dividends, especially as this does not qualify for the Canadian dividend tax credit. She owns BCE instead.
telephone utilities
COMMENT
She prefers to own a Canadian telco for dividends, especially as this does not qualify for the Canadian dividend tax credit. She owns BCE instead.
telephone utilities
PAST TOP PICK
PAST TOP PICK
(A Top Pick Jun 11/19, Up 9%) She continues to hold this. It manages over $500 billion of alternative assets. The company, in this low interest rate environment, will continue to do well. They bought 62% interest in a financial company that focuses on distressed credit assets. They have the option to buy the balance of that company over the next 10 years. This gives them about $75 billion of available cash for deployment.
management
diversified
PAST TOP PICK
(A Top Pick Jun 11/19, Down 16%) She continues to hold it and the yield is about 5%. They have increased loan loss provisions by about 4 times the same amount a year ago. She thinks TD was conservative on the provisions and hopes that will be the high water mark. They have maintained their dividend and will likely keep it flat to protect the payout ratio, which has risen to 65% from normal targets of around 45%. She thinks the dividend will be sustainable for now. It is trading near 1.2 times book value -- near historic lows.
banks
DON'T BUY
An engineering construction company. They own someone else in the space. The sector has had a slow down with COVID-19. She is not sure that the company's percentage of construction exposure, as cost over runs can impact the company having to take charges. It should be an attractive business in the long run, but she sees other alternatives.
contractors
COMMENT
Canada downgraded to AA+ The reasons for the credit downgrade are not necessarily unique to Canada -- being COVID-19 related. The increases to deficits will be impacting companies around the world. The debt to GDP should be expected to increase. Going into this, consumer debt was high and the economy has been impacted by the exposure to land-locked oil production. Overall, she is encouraged that the rating agency sees the situation as being stable.
