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Today, The Monthly Gems by Allan Tong and Andrey Omelchak commented about whether CSU-T, BYD-T, TOI-X, GSY-T, EQB-T, NFI-T, ATRL-T, ARE-T, HPS.A-T, BDGI-T, MG-T, GUD-T, TSU-T, LMN-X, BRK.B-N, WJX-T, GCG-T, AC-T, PBH-T, WELL-T, PRL-T, CCA-T, SAP-T, WCP-T are stocks to buy or sell.
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A month ago, SAP reported its full-year earnings, and EPS of €2.68 beat expectations, but was down from €3.24 in FY 2023. Revenues of €34.2b were 9.5% higher from FY 2023. The main driver was the cloud. In 2024, its cloud backlog leapt 43% year-over-year to €63.3 billion while cloud revenues jumped 25% to €17.1 billion. This included a 33% increase in cloud ERP suite revenues. In terms of AI, SAP has incorporated over 1,300 skills into AI co-pilot which automates 80% of the most-used user activities.
Well, Cogeco has. It boasts an earnings yield of 30.6%, which places it in the top 10% among global peers, while its book value yield of 146.1% put it in the top 20%. True, its 5.91% dividend yield is smaller than its Canadian competitors, but is safe at a 42.5% payout ratio and growing 10% annually--twice as fast as the others--thanks to strong cash flow. Further, CCA trades at a 6.67x PE, compared to Telus' 30.2x, Rogers' 12.4x and BCE's 179x. Cash flow is one reason why CCA has outpaced its peers in the past year, with shares up nearly 15%, while the Big Three have lost ground, with Rogers and BCE both sinking 30%.
Someone who really understands the value of a security can really find a lot of bargains on days like these. You can make a case that the overall market is expensive. But at the same time, some of the individual securities underneath are at panic-level pricing, even high-quality ones.
There's been quite a selloff already. Some stocks are down 20, 30, even 40%. Even if you apply the worst-case scenario on the tariff front, many securities are at very attractive buying levels at this time.
Every day in Canada you hear about tariffs, and the concern is well warranted. Businesses and stocks will be impacted. As well, consumer confidence and business confidence are at all-time lows.
At the same time, some stocks are not impacted by tariffs at all. The underlying businesses are doing really well and the business prospects are good. Yet they've been caught in the fund-flow dynamics, where nobody wants to invest in Canada. At some point, that will reverse in the opposite direction.
So it's a really good time to buy those securities.
Based on all the geopolitical and economic news, at some point fatigue settles in. Usually takes several months to do that. Eventually, investors will be able to dissect securities based on whether or not they're impacted by tariffs and by how much.
Even if the news flow changes from the White House on a daily basis, big money managers will have picked their spots to buy Canadian stocks, and the fund flow dynamics will become increasingly positive. He likes to focus on investments that aren't impacted by things outside his control, like tariffs.
Great company and management. Delivers very good risk-adjusted returns, very high ROE. Likes that they can reprice loans at a very fast rate. Need to see additional diversification of funding sources; if so, would warrant a higher multiple. UK acquisition highly accretive, which will play out over 12-24 months.
Pullback is unwarranted, good time to buy. Concern about credit quality, but so far credit experience has been good.
If you're looking for stable dividend stocks, it's a good place to put capital to work. You can feel safe with those dividends, but don't expect to generate outsized returns over the investment cycle.
You need to sort stock candidates into categories: true long-term compounders, trading stocks, or somewhere in between. Canadian telcos are somewhere in between. Buy them, but slowly, if you're happy to only get the dividend. He wouldn't accumulate aggressively. If competition pops up in Canada, that would not be good.
Great company. Management's done well on M&A front. Delayed financials, not a good sign; a US company they own is being investigated. Red flag. He still has faith in management. Watch the next month very carefully; further delay is a double-red flag, resolution would represent a very strong buying opportunity.
Exposed to tariffs by only a small extent. What they are exposed to is the Canadian consumer, who might already be scaling back. It was one of his Top Picks last time around, mainly because added a lot of capacity in US. Concern around SBUX, its biggest client in the US; last quarter indicated this relationship is working. Interesting at these levels.
He likes technology companies, as they're capital-light businesses. Agile business models. Revenues are usually sticky. High recurring revenue. With a great management team, you're often looking at margin expansion as well.
Be careful not to overpay for this type of business. That's been hard over the last few years, but the current environment brings good opportunities.
Best capital allocator in the world, and probably the best investor of all time. Sitting on a record pile of cash. Be cautious, as it's exposed to the equity markets. Built to withstand the storm. Long term, takes advantage of unique opportunities in the market. Well positioned to outperform the broader market over an extended period of time. High faith in succession plans.
WCP has a book value yield of 104.9% and an earnings yield of 12.8%, both good, while it pays a 7.8% dividend yield based on a decent 53.65% payout ratio, and trades at a low 6.88x PE. Compare that to CNQ's 15.33x and Suncor's 11.6x. The street likes the deal, giving WCP an average price target of $13.36, or 42% higher, based on six buys and one hold. Obviously, the street gives the merger a thumbs up, with three analysts assigning an average price target of $13.00, including one upgrade.