Portfolio Manager at Arrow Capital Management
Member since: Nov '06 · 1076 Opinions
Last year, markets did very well because of tech, but the rest of the sectors were very mixed. A mixed year. 2024, we'll likely see the opposite, because the economy is weak. So, tech will not perform as strongly. Some names are left behind, so this is a great stockpicker's market. Profits will come under pressure this year.
Now, they're America's biggest drug store operator, an area which did well during Covid, but is struggling with theft and other reasons. They're one of the big three pharmacy benefit managers, historically a good business and remains decent. This is a good company, but has been caught up in drug store weakness and sentiment that says sell. Going forward, though, this is an investment. Pays a 3.6% dividend and trades at a 10x PE.
He bought a lot of oil in 2020 when it bottomed, and oil did well through 2022. Shares have come down since, but oil and gas prices remain good, and the stocks offer good free cash flows. But sentiment is not there. The Saudis don't want oil below $70/barrel, and they run OPEC. If you believe that the Saudis will cut production to maintain that price, then oil stocks are undervalued. The large-caps have the best balance sheets and are the most stable. Mid-caps are slightly more volatile and the small-caps are very but are really cheap though don't pay dividends. TVE is the best mid-cap with great assets in the Clearwater. The knock is that they made some acquisitions which raised their debt, but this is short term. He expects a rebound this year.
See also comments about TVE. Pays a yield of 7.3%, sustainable, trades cheaply and is a buy.
A great long-term franchise, but they've loaded the balance sheet with debt and cut the dividend three years ago. Their ESPN is starting to struggle, and Disney+ isn't making them money. They raised the prices on the theme parks too high.
So much wealth got destroyed in the cannabis sector, but Tilray will be one of the survivors. He can't offer a solid opinion about TLRY, because he needs to learn more about it, but he's starting to study the cannabis sector. Something will happen in the U.S. that will make banking for these companies allowable--and this will be a major move.
The re-sell Microsoft products into companies. Really likes this. Is a tech services and not a software company. Well-run, pays a 2.5% dividend and 28x PE. This year may be choppy because he's unsure what corporate spending on tech will be like.
A good small-cap and a solid business. A sleepy stock that's overlooked, but they execute and pay a steady dividend. Pays a nice dividend of over 6%.
Did well in 2021-2, but sideways in 2023 despite fundamentals improving. Pays a safe 7.8% dividend yield as they build free cash flow. Costs of production are only $5/barrel. Likely is the cheapest royalty company in North America. Downside is $12, while he targets as high as $30.
The pipeline is delayed again, but a year or two from now Canada will see bottlenecks again in moving oil. ENB is the biggest pipeline operator, trades at a discount to the rails, and pays a 7.6% dividend yield.
Will continue to do well. Is a misunderstood business EFN is the world's largest fleet manager of delivery vehicles (Amazon, P&G); they outsource for these companies. There's little risk in this business. Pays a 2% dividend, trades at 15x PE and 8% free cash flow yield.
A remarkable success story in global oil & gas. The best-run in this business. That's why the stock has done well. Will continue to grow, though at a slower rate than the past 40 years. Are also a major natural gas producer. They buy companies at barn-sale prices with their healthy balance sheet.
A juggernaut in cell towers. Has done very well over time. However, they carry a lot of debt, which is why shares have underperformed in recent years. If interest rates stay high, AMT will have to deal with that.
They've struggled the most among the big U.S. banks. The CEO is carving out their weaker businesses. If he can execute this well, there is upside. Overall, a solid holding.
Well-run and a major oil producer. Very levered to natural gas, which is under a little pressure now. But they enjoy low costs. Nat gas prices may sell off a little more, but TOU looks compelling now.