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COMMENT
The stock market has had a V-shaped recovery, but the economy hasn't as people need time to get used to say, going to a restaurant, or heading downtown. This will eventually effect the stock market. Who really knows what 2021 earnings will be? Those projections will likely drift down later this year. Invest in specific areas of the market. Be cautious and patient. Own asset-light companies with good balance sheets and low debt.
BUY
1-year outlook They've had a very good year like all pharmas, even in an election year. Pays a great yield and trades at a low multiple. Driving this are their COVID-19 vaccine efforts. They recently did a deal that puts them in MNRA which allows the fast-tracking of developing vaccines. This whole sector will continue to do well. The FDA has loosened rules to fast-track a COVID drug which he expects will lead to an effective result.
biotechnology
pharmaceutical
BUY
They make e-signatures and contract management. DOCU has benefitted from this stay-at-home pandemic. They're moving into managing entire documents which will lead to decent growth and better pricing on their software. The U.S. is moving away from paper in business and more into digital, which is a tailwind.
Technology
COMMENT
Dividends safe for Canadian banks in the coming years? Like the US banks, Canadian ones will have difficult quarters, but they have lots of capital to protect their dividends. Don't expect share buybacks though. Loan loss provisions will increase until the economy returns to some sort of normalcy. Eventually, the headwinds will turn into tailwinds. The dividends are sustainable.
COMMENT
Fear of US-China tensions. Chinese semi companies are less advanced than America's. Semis are key in tech and have become strategic. 5G has been put off slightly, delayed into 2021, but QCOM will benefit. China will try to be more dominant in semis, so pay attention to the US-China issue.
Telecommunications
BUY ON WEAKNESS
It'll continue to outperform. Yes, AMZN benefitted from the lockdown. It dominates e-commerce, but they are relatively small in the retail marketplace. Also, people won't run back to malls, so that will help Amazon. Worry about high expectations for tech stocks in general. Amazon will continue to grow its share of retail and e-commerce.
specialty stores
PAST TOP PICK
(A Top Pick Aug 15/19, Down 6%) The US banks will face tough quarters with higher loan loss provisions. But BAC is well diversified. The 3.5% dividend will be safe and will still buyback shares. It's cheap at these levels, according to book value for instance. The CEO is doing the right things in cutting costs by moving a lot more of their business onto the cloud. Headwinds are already baked into the share price.
banks
PAST TOP PICK
(A Top Pick Aug 15/19, Down 10%) Great management; they wisely cut their dividend just as the COVID troubles started. Disney+ beat their own expectations. But the parks make up a lot of their revenues and face tough quarters given the virus. Still, Disney has great content and has made smart acquisitions (i.e. Fox). They'll probably sell some assets and continue to cut costs. Disney won't face balance sheet problems and will get through this. But the amusement parks remain a serious challenge. Their blockbusters will eventually reach theatres. This'll go sideways until we return to normal.
entertainment services
COMMENT
Trades near 10x PE. But BNS suffers because they have assets in emerging markets, namely South America, where economies will struggle for the next while. That said, BNS understands international banking like no other Canadian bank. Expect volatility in BNS and Canadian banks in general will take on more loan losses. In terms of tech, BNS is catching up to its peers now.
banks
COMMENT
They closed down many stores during the pandemic. During the openings now it's tougher to walk in and get a coffee. They've had stops and starts. However, coffee culture won't go away and people will go to Starbucks. SBUX has reduced earnings numbers and the PE will decline. There's still global growth in this company, but coming quarters will be tough, because full service is being curtailed. In 2021 if there's normalcy, SBUX will enjoy growth.
food services
BUY
Which Brookfield stock to buy for share and dividend increase? BAM owns pieces of the other Brookfield stocks. Brookfield is in a unique spot because they can gather a lot of assets using (a lot of) money on the side to invest). However, they have a lot of competition in the alternative assets space, like pension funds, that are looking to invest in assets in and outside Canada. Assets are cheap now, so it's an opportunity for BAM.
management
diversified
BUY
$3.5 billion investment in warehouses and Shopify deal They're one of the few companies that can compete with Amazon, given how they're pushing their online business aggressively through the Shopify deal. (Target can also compete.) Walmart has done all the right things. They've executed well online and have performed well during this pandemic. Walmart will continue to invest in e-commerce with strong supply chain management. It's a great story.
department stores
