President & CEO at Liberty International Investment Management Inc
Member since: Oct '00 · 2414 Opinions
If the US Fed cut rates in 2024, winners will include emerging market and value stocks. The USD will decline and EM stocks will climb; those countries hold big USD debts. Long term, reinvested dividends count, not stock prices. So, invest in business whose dividends will rise over time. In 2008, Canadian banks were yielding 8% as prices fell, but prices eventually rose.
A secure business, garbage collection agencies, but all these garbage sector stocks trade at a high 30x PE. RSG has the best credit rating of the group at BBB. Margins are good, better than peers, at 17 cents on the dollar. Good stock, but the stock price is high now. The 1.3% dividend grows at an average 5-10% range while he prefers more than 10%.
60% of revenues come outside North America, which are currencies that are fading against the strong US dollar which rose along with interest rates. If the USD falls, then the S&P could underperform (they've outperformed the past 10 years). UL needs a lower USD to increase earnings. He still owns it. Pays a near-4% dividend, so he's holding onto it and waiting.
Dollar-cost average down or will it be a falling knife?
One: telcos fell this year because of rising interest rates. Two: BCE rolled out 5G, which is great, but consumers don't want to pay for it (it's pricey). The Canadian telcos are among the companies that have issued a lot of debt in recent years. They hold a lot of debt. Pays a 7.5% dividend yield, safe, but don't expect much growth unless rates fall in a big way (and he doesn't see a catalyst for that).
Are merging with another Danish company which will remake the company because it gets them into the biologics industry. The street didn't like the price they were paying at first, but the deal offers growth. Shares have been growing and will continue to do. Their dividend growth averages 10%. He's adding shares.
They make the eyes on robots used in manufacturing for quality control, with Apple as their #1 customer. But an economic slowdown means less demand for these robots. When rates fall, demand will recover. The dividend grows around 10% annually, but it's tiny. CGNX has little competition. Be patient for this to rebound.
They reported a beat last Thursday. They're turning their software business into the monthly subscription model like Microsoft's. Margins will be smaller, but incremental revenues will be more regular and less lumpy. Earnings were good. Dividend rises 10% annually. He holds it in TFSAs and just made a major purchase.
The drop in commodity prices has hurt agricultural stocks, because farmers lack the money to buy irrigation equipment. But it remains a long-term buy and he's been adding shares. LNN's equipment is very good.
We all use fuses, including for EVs. He's owned this for 10 years. They also make sensors for cars and LED lights. The stock hit highs last September, but is cheaper than. Trades at 22x PE, but historically it's 14x. The market expects earnings growth.
He suffered owning this for 5 years. Is up because near-shoring is costing less for US consumers while the Mexican government recovers. He was patient with this; it's up 60% this year.
Still likes it, because their investment portfolio rose with higher interest rates. They have the best combined ratio at 88%. Have a AA credit rating.
It pays a 5.5% dividend, so you don't need much share growth. They have the best credit rating in Europe, mostly exposed to northern Europe, not Italy, Spain and Greece. Conservative balance sheet. The central bank in Sweden raised rates, which raised the stock price, but like Canada, Sweden's economy relies heavily on real estate. So, there could be write-downs in the future. He'll stick with this.
Benefitting from more immigration to Ontario. A predictable utility that'll grow 5% annually, so just collect the dividend. Shares won't do much. It's a slow-growing business. But Fortis and Emera pay higher dividends.
It's show-me time. They made money during Covid, but they haven't performed since. Is the forgotten pharma company. Need to release a big drug. Tax-loss selling is nearly done, so shares should rise. Trades at a reasonable PE. Pays a 6% dividend, but grows at only 3.8%.
A personal holding since 1995. Their weight-loss drug is the big news now. Remember that after this hype, we'll see if there are any long-term side effects (i.e. the stomach). It's an unproven drug, but could be fine. Meanwhile, they grow their dividend 12% annually. He took profits, because shares ran up so fast. Have the highest R&D to revenues among pharmas. A long-term hold.