Full episode: Market Call Tonight for Tuesday, October 16, 2018
Michael Decter, president and CEO of LDIC Inc.
Focus: Canadian large caps
We expect markets to stabilize at 5 per cent to 10 per cent below their peak levels. This stabilization is likely to be supported by strong Q3 earnings released over the next three to four weeks. Volatility is expected to remain high through the early stages of Q3.
JPMORGAN CHASE (JPM.N)
- Overall, we feel the U.S. banks have a greater earnings growth profile given their valuation versus the Canadian banks (particularly JPMorgan). They should also benefit from rising yields more so than Canadian banks.
- JPMorgan is the leader in the U.S. banking space due to its diverse revenue stream. It recently reported strong Q3 results. The bank is well positioned in the space against its peers given its market leadership.
- The company has one of the best management teams, currently focused on deleveraging.
PARKLAND FUEL (PKI.TO)
- Parkland has been firing on all cylinders as of late, making strategic and accretive acquisitions. It most recently acquired a 75 per cent stake in Caribbean operator SOL for $1.6 billion. SOL is the largest integrated independent petroleum marketer in the Caribbean region, a good opportunity for Parkland to create an international platform for future growth in the Caribbean and support the company’s efforts in continental North America.
- It’s in a strong position from vertically integrating their business lines, from refining to its convenience stores.
- It’s still early days in terms of business model. There’s lots of runway for growth.
ANALOG DEVICES (AD.O)
- Analog Devices has a solid earnings growth profile driven by expanding operating margins versus its valuation: 14.3 times compared to the historic 18.7 times.
- Business lines should benefit from an overall strong macro environment.
- Management expects high single-digit revenue growth.
PAST PICKS: AUG. 9, 2018
DESCARTES SYSTEMS (DSG.TO)
- Then: $44.28
- Now: $40.79
- Return: -8%
- Total return: -8%
BROOKFIELD INFRASTRUCTURE PARTNER (BIP_u.TO)
- Then: $53.46
- Now: $52.26
- Return: -2%
- Total return: -1%
JPMORGAN CHASE (JPM.N)
- Then: $116.88
- Now: $108.62
- Return: -7%
- Total return: -6%
Total return average: -5%
LDIC North American Small Business Fund
- 1 month: 3.77% fund, -1.67% index
- 1 year: 19.07% fund, 4.55% index
- Inception (May 22, 2015): 14.27% fund, 5.52% index
Index: Benchmark blend is 70% S&P TSX Small Cap Index (CAD) & 30% Russell 2000 Index (USD).
TOP 5 HOLDINGS AND WEIGHTINGS
- Cargojet Inc: 3.6%
- Horizon North Logistics Inc: 3.5%
- Ag Growth International Inc: 3.3%
- Baylin Technologies Inc: 3.3%
- Akumin Inc: 3.2%