All posts by Brett Girard

BNN Market Call Tonight – December 7, 2018 – Top Picks

BNN Market Call Investment Videos,

Liberty IIM, Top Pick of Bloomberg

HALMA PLC (HLMA.LON)

Halma is a health and safety sensor technology group which makes products that detect hazards and protects assets at work in public and commercial buildings. Product demand is steady and, while not recession-proof, it can hold its own in difficult markets. Only 25 per cent of their sales are in the U.K. and European markets, so any drop in the British pound is beneficial to higher sales and earnings.

FIRST CASH FINANCIAL SERVICES (FCFS.O 0.89%)

First Cash Financial Services owns and operates pawn stores in the U.S., Mexico and other South American countries. When economies fall into recession, pawn shop activity picks up. If the U.S. dollar falls and the price of gold rises, First Cash Capital also benefits as they deal a lot with pawned gold jewelry. Since its first payment in 2015, the company has been raising its dividend by about 18 per cent annually.

METRO INC (MRU.TO 0.90%)

Metro is a Canadian food retailer in Quebec and Ontario that has recently purchased the assets of Jean Coutu, a pharmacy retailer. This is an inelastic consumer company that performs in both strong and weak economies. It currently trades at 14.5 times 2020 earnings as profits and dividends are expected to grow by 10 per year.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
HLMA           Y           Y           Y
FCFS           Y           Y           Y
MRU           Y           Y           Y

BNN Market Call Tonight – November 2, 2018 – Top Picks

BNN Market Call Investment Videos,
market call tonight screenshot

TRANSCANADA (TRP.TO) 
Last bought at $50.99.

TransCanada mostly operates natural gas pipelines in North America and Mexico. It plans to add $10 billion of new projects in 2019 and another $26 billion by 2020. If their Keystone XL project gets approved, the shares should recover from the discount they currently trade. The firm expects dividend growth to continue in the 8 to 10 per cent range for the foreseeable future. Its current dividend yield is an attractive 5.42 per cent.

UNILEVER NV (UN.N)
Last bought at US$53.88.

Unilever is a global consumer products company with three main divisions: food and beverages, cleaning agents and personal care. Global market volumes have remained robust in aggregate, up around 1 per cent. There are some significant bright spots:  Market growth in India and China remains strong, while e-commerce continues to be the key growth driver. In aggregate, underlying sales grew by 3.8 per cent in the third quarter, with volumes up by 2.4 per cent. In the emerging markets, growth accelerated to 5.6 per cent and we’ve maintained good volume growth at 3.4 per cent, which is very encouraging. Its current yield is 3.15 per cent and the dividend has historically grown by 10 per cent annually.

BECTON DICKINSON (BDX.N)
Last bought at US$234.16.

Becton Dickinson is a medical technology company that makes and sells medical devices, instrument systems and reagents. Its 2017 acquisition of C.R. Bard combined two strong free cash flow generating companies and added urology products to the Becton sales line. The company also makes disposable products, such as syringes and vials for blood tests. The stock yields 1.28 per cent, but the dividend has consistently grown 10 per cent annually.

Disclosure     |     Personal     |     Family     |     Portfolio

TRP                                 Y                            Y                          Y

UN                                  Y                            Y                          Y

BDX                                 Y                            Y                          Y

BNN Market Call Tonight – November 2, 2018 – Market Outlook

Articles,

MARKET OUTLOOK

I’m not convinced that we’re out of the woods yet. These markets still appear to be expensive. Here’s why:

  1. Midterm elections are around the corner. If the Democrats win, U.S. politics will be deadlocked for another two years.
  2. By next spring, earnings growth won’t have the benefit of tax cuts. From what I’ve seen so far, earnings growth for most U.S. companies is at 0 to 10 per cent when not accounting for tax cuts: That’s average at best and not as stunning as many analysts tout.
  3. Emerging market issues have reduced growth for U.S. multinational companies. This is especially those in the technology sector. The same thing occurred in 1997 during the Asian contagion which preceded the bursting of the tech bubble in 2000.
  4. The Federal Reserve should continue on its rate hike policy through December. Rising short-term rates pressure companies as they operate by borrowing in the short-term markets. This slows down their capacity to hire, innovate and acquire.
  5. Wages are quietly rising. The news today was that salaries rose just over 3 per cent. Rising wages is something else corporations have to deal with on the cost side of their businesses.

So what’s an investor to do?

  1. Stop trading and start investing. Share prices are only important when buying and selling. This is similar to your home: The only time its price is relevant is when you buy it or sell it. Since two-thirds of all long-term performance come from rising dividends and the re-investment of those dividends, investors should focus more on the rate of dividend increase, not the stock price or the current yield. Trading actively just pays for your broker’s retirement, not yours.
  2. Hold some cash and wait for better opportunities. In the past decade, it’s been a successful strategy to buy on the dips. But those investors haven’t seen markets like 2008, when buying on the dips could have bankrupted you because the market kept trending lower between December 2007 and March 2009. The cash-on-hand is to buy after a big correction (20 per cent or more), when valuations get cheap. While the market dropped significantly in October, it still hasn’t made it back to where it was at the end of September.
  3. Think about portfolio structure and have a plan in place. Now is the time to have a diversified portfolio to avoid correlation risk (too many names in the same sector) and concentration risk (too much ownership of one stock).
  4. Be patient and unemotional. Emotional investors sold at the bottom of the market in 2008 and never returned. They missed the best 10-year bull market in our lifetime. Be more practical instead, like Warren Buffett. Be an investor in a business, not a speculator, and let the dividends grow.

BNN Market Call Tonight – October 12, 2018 – Past Picks

BNN Market Call Investment Videos,

Market Call Past picks - Bloomberg

(from David’s appearance on Market Call on August 21, 2017)

COLOPLAST A/S (COLOB CPH)

  • Then: DKK 509.50
  • Now: DKK 612.60
  • Return: 20%
  • Total return: 24%

STRYKER CORP (SYK.N)

  • Then: $145.13
  • Now: $171.04
  • Return: 18%
  • Total return: 20%

OPEN TEXT (OTEX.TO)

  • Then: $40.29
  • Now: $45.34
  • Return: 13%
  • Total return: 15%

Total return average: 20%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
COLOB                  Y           Y                                   Y
SYK                  Y           Y                                   Y
OTEX                  Y         Y                                   Y

BNN Market Call Tonight – October 12, 2018 – Market Outlook

Articles,

MARKET OUTLOOK

Given the market volatility of the past few weeks, it’s important for investors not to lose their heads. Here are some guidelines for getting through crucial market moments:

  1. We’re just entering earnings season. This should reveal if companies’ earnings are slowing because of tariffs and higher input prices. No need to do anything until we see the impact of earnings on stock prices.
  2. U.S. midterm elections are coming up. If the Democrats win the House and/or the Senate, the market could sell off violently as Washington would return to partisan politics and create a deadlock on any future legislation being passed. Again, no need to do anything until then.
  3. From a technical standpoint, the markets still aren’t oversold yet so we don’t really see any screaming opportunities.
  4. In our estimation, the market top on the S&P 500 Index would be 3,700, which would be similar in valuation to the 1929 and 2000 peaks. Conversely, we’d only be interested in adding to our positions with any significance if the S&P 500 fell to 2,200 (20 per cent lower than today) where valuations make more sense. Remember, Wall Street pushes “adjusted earnings,” which are artificial as they don’t include interest on debt, taxes and depreciation.
  5. Holding cash makes more sense than ever. The maximum needed is 20 per cent. There’s no need to go over that amount because you’ll then have to find the market bottom (which nobody has ever been able to do).
  6. Avoid correlation risk in your portfolios. Owning similar stocks would have sent your portfolio down further than most, especially if you’re heavily tech-weighted.
  7. Avoid concentration risk. We hold 30 stocks in our portfolios with an average weight of 3 per cent. If one of them becomes a 6 per cent holding, we automatically sell half. This rebalancing helps protect the downside.
  8. You haven’t lost any money unless you sell.
  9. Time and compounding is how you make money. Two-thirds of all stock market performance in history has come from rising dividends and the re-investment of those dividends. If you want to retire wealthy, you have to let the dividends grow.
  10. If you wish to buy stocks in this market, we suggest you buy only half positions to start and sit back and watch what happens next.

In the end, there’s no reason to try to be a hero in these heady markets. Instead, discipline will carry the day.