Apr 5, 2016
Steve DiGregorio's top picks: Apr. 5, 2016
Steve DiGregorio - Top Picks
FOCUS: Canadian Dividend Paying Stocks
Market Outlook:
Long term, we like remain positive on the equity markets, shorter term we anticipate increased volatility.
We see this as a period of time to begin repatriating investments to Canada.
- Fwd P/E for the TSX and S&P 500 are similar, but more earnings power in Canada two years out. 2016 Q1 should mark the trough for Canadian earnings (~$170)
- Canadian GDP has held in very well despite all the negative headlines
- Commodities have been basing (people are underestimating the earnings power from this), and industrials have been strong
- Better to repatriate to dividends stock in Canada (take advantage of the dividend tax credit), and growth outside of Canada
- Shorts are leaving Canada (Banks + 10% in March)
- Fiscal & Monetary policy positive
We see dividend investing as ideal for this environment (low rate, low growth)
Ideal scenario: Fiscal stimulus, $50 oil, 75 cent dollar.
TOP PICKS:
Artis REIT Preferred Shares Series C (AX_u.TO)
Callable 2018
CY 7.75%, Reset yield of 8.5%
446bps + 120bps = 556 > than coupon
Expensive capital
30% of properties in AB, 30%
Rona Preferred Shares Series A (RONa.TO)
Callable in 5 years
Real yield is 4.7% (which is expensive to lowes)
Lowe’s needs to continue to report in Canada
7M outstanding, therefore 35M extra on a $3B deal
Risk, competition bureau,
Downside to 4.5%-5% yield, imply $18 price
Transforce (TFI.TO)
Free cash flow machine (even in 2008 and 2009
DJ trucking index at 52 week high, TFI lagging.
Modified dutch auction for $220M of shares @ $22, only ^60 million tendered
Been building the last mile delivery through acquisitions, develop e-commerce B2C. Relationship with Amazon
Disclosure | Personal | Family | Portfolio/Fund |
---|---|---|---|
AX_u | Y | N | Y |
RONa | N | N | Y |
TFI | N | Y | Y |
Past Picks: Oct. 30, 2015
COM DEV International (CDV.TO) - Acquired By Honeywell February 9, 2016
Recommended at: | Exit at: | Change | Total Return |
---|---|---|---|
$5.66 | $6.20 | +8.70% | +8.70% |
Crius Energy Trust (KWH_u.TO)
Recommended at: | Now at: | Change | Total Return |
---|---|---|---|
$9.41 | $8.38 | -10.95% | -7.80% |
Dream Hard Asset Alternatives Trust (DRA_u.TO)
Recommended at: | Now at: | Change | Total Return |
---|---|---|---|
$5.87 | $5.32 | -9.37% | -6.53% |
Total Return Average : -1.88%
Disclosure | Personal | Family | Portfolio/Fund |
---|---|---|---|
CDV | - | - | - |
DRA_u | Y | Y | Y |
KWH_u | N | Y | Y |