All posts by EZMarketing

BNN Market Call Tonight – March 28, 2018 – Past Picks

Vidéos

BECTON DICKINSON (BDX.N 0.28%)

A global medical technology company engaged in the sale of medical devices, instrument systems and reagents used by healthcare institutions, life science researchers, clinical laboratories, the pharmaceutical industry and the general public. The company began as a major manufacturer of syringes. It recently merged with C.R. Bard, which gives them greater exposure to ostomy care, catheters and colostomy bags.

  • Then: $184.13
  • Now: $212.42
  • Return: 15.36%
  • Total return: 17.02%

LITTELFUSE (LFUS.O)

Littelfuse makes fuses and other circuit protection devices for use in the automotive, electronic and general industrial markets. It also makes LED lights and sensors. With the surge in electrification demand, Littelfuse should benefit from the need for fuses. Its first dividend was issued at $0.60 a share in 2010 and it has grown since then to $1.48 a share, an annual increase of 18 per cent.

  • Then: $158.33
  • Now: $201.61
  • Return: 27.33%
  • Total return: 28.31%

DASSAULT SYSTEMES (DSY.EPA)

Dassault provides CAD/CAM software applications services designed to support their clients’ innovation processes. Dassault helps in the 3D design process of a product or idea by calculating the best way to build it at the lowest cost. Earnings have been helped by sales to new clients and ongoing upgrade support and service to existing clients.

  • Then: €82.15
  • Now: €110.10
  • Return: 34.02%
  • Total return: 34.89%

Total return average: 26.74%

BNN Market Call Tonight – March 28, 2018 – Top Picks

Vidéos

ATLANTIA (ATL.BIT)
Last purchased on March 27 at 24.79 euros.

Atlantia manages transport infrastructure. The company provides electronic tolling systems, airport automation and traffic information services. It manages toll road networks in Italy, Brazil, Chile, India, Poland and now Spain as wells as airports in Rome and Nice.

The company trades at a normalized 14 times earnings, yields 4.82 per cent and its dividend has risen an average of 10 per cent a year, which is above the median of global stocks. Atlantia and Real Madrid chairman Florentino Perez agreed earlier this month to jointly buy Spanish company Abertis, which operates more than 5,000 miles of highways, including a network in France that’s considered its most attractive asset.

PAYCHEX (PAYX.O 1.27%)
Last purchased on March 26 at $64.39.

Paychex provides comprehensive payroll and integrated human resource and employee benefits, outsourcing solutions for small-to-medium-sized businesses. It gets to invest payroll remittances to the IRS every other weekend – every quarter-per-cent increase adds $3 million to Paychex’s net profits.

The stock currently trades around 22 times earnings and yields 3.3 per cent. It benefits greatly from the recent corporate tax cuts (35 per cent tax rate to 21 per cent), which should enable the company to raise its dividend by 10 per cent a year or more. The stock price fell after recent earnings as its margins will drop 2 per cent, with the company using the tax cuts to free up capital to make acquisitions in Europe and invest in technology.

TOROMONT INDUSTRIES (TIH.TO 0.45%)
Last purchased on March 26 at $55.40.

Toromont sells, rents and services Caterpillar construction equipment and power systems in the provinces of Ontario, Quebec, Manitoba, the Maritime provinces and Nunavut. It also manufactures and distributes refrigeration and process systems throughout North America – warehouses and ice rinks.

Its recent purchase of Hewitt gave it new territories in Quebec and the Maritimes and provides it with greater pricing power to take advantage of increases in infrastructure spending by the federal government and improvements in demand in the mining sector. The company just raised its dividend by 23 per cent and yields 1.65 per cent.

BNN Market Call Tonight – March 28, 2018 – Market Outlook

Articles,

MARKET OUTLOOK

We expect increased volatility across all asset classes – stocks, bonds, commodities and real estate — meaning investors have to be patient and diligent to find buying opportunities. Stock valuations still appear to be stretched. The market could easily go sideways for the next two years until earnings catch up to current prices. Or, in the interim, the stock market could fall 20 per cent  to return to proper equilibrium.

For investors, it’s important to:

  • Hold cash to prepare for market corrections or to take advantage of buying opportunities. We currently hold 20 per cent cash times the client’s equity weighting. If the portfolio is 100 per cent equities, they’ll hold 20 per cent cash. If the asset mix is 50 per cent stocks and 50 per cent fixed income, they’ll hold 10 per cent cash (50 per cent multiplied by 20 per cent).
  • Stop reaching for yield. A stock’s current yield isn’t as important as the dividend growth rate. The average dividend payer on the TSX Index increased its dividends by 9 per cent this year. For the S&P 500 Index, it was 11 per cent. Dividend growth is necessary to offset inflation. Buying a stock with a high yield but no dividend growth means that inflation eats away at an investor’s spending power and the value of the investment deteriorates over time. This is especially bad for retirees.
  • Take advantage of opportunities. If a stock drops 20 per cent more than the overall market performance and there’s nothing wrong with the business model, this often presents buying opportunities.

BNN Market Call – January 29, 2018 – Past Picks

Vidéos

DANAHER CORP (DHR.N 0.32%)

Danaher is a conglomerate focused on five areas: Life sciences, diagnostics, water quality, product ID and dental. Each has high barriers to entry. The company acquires firms and changes the business structure to reduce costs and increase margins, providing solid free cash flow growth which leads to higher annual dividends and, ultimately, a higher long-term share price.

  • Then: $87.50
  • Now: $103.69
  • Return: 18.50%
  • Total return: 19.26%

PAYCHEX INC (PAYX.O 0.28%)

Paychex Inc provides comprehensive payroll and integrated human resource and employee benefits outsourcing solutions for small-to-medium-sized businesses in the U.S. For every quarter-per-cent increase in rates, the company makes $3 million or $0.01 a share in profits just by investing the float set for remittance to the IRS from payroll taxes. The recent corporate tax cut from 35 per cent to 21 per cent should provide Paychex with ample cash to continue raising its dividend aggressively.

  • Then: $62.56
  • Now: $68.83
  • Return: 10.02%
  • Total return: 12.73%

DASSAULT SYSTEMES (DSY FP)

The company provides a variety of computer-aided design, manufacturing, engineering and product life-cycle management (PLM) software that firms use to create, model and test designs. From original idea to finished product, Dassault’s software is the creative tool. Recent acquisitions have included firms with artificial intelligence experience to further improve the design experience for their clients.

  • Then: 76.81 euros
  • Now: 92.80 euros
  • Return: 20.81%
  • Total return: 21.59%

BNN Market Call Tonight – January 29, 2018 – Market Outlook

Articles

DAVID DRISCOLL’S MARKET OUTLOOK

In just over three weeks of market action, we’ve seen:

  • The S&P 500 Index up 7.45 per cent. According to the Stock Traders’ Almanac, how January goes, so goes the year. This would imply that we have positive returns on the stock market in 2018.
  • Stock-based funds overall have brought in just shy of $77 billion in 2018 with the lion’s share of $59.2 billion going to passively focused exchange-traded funds. By comparison, equity funds across all classes took in a net $278 billion for all of 2017 according to Morningstar, meaning that last week alone equated to 12 per cent of flows for the entire previous year.
  • Bank of America Merrill Lynch’s “Bull & Bear” indicator is sending a sell sign, which has been accurate 11 straight times since the firm started tracking it in 2002. The indicator points to a technical pullback for the S&P 500 to 2,686, which would be about a six-per-cent drop from the current level.
  • Thanks to U.S. tax cuts, American companies are thinking of closing down or selling Canadian assets and taking the cash back to the U.S. to re-invest there as the corporate tax rate is now lower than Canada’s (21 per cent vs.30 per cent).
  • Bond prices have fallen 1.8 per cent on the Government of Canada 10-year bond. For the 10-year U.S. Treasury, its price has fallen 2.1 per cent.
  • And thanks to a falling U.S. dollar, commodity prices (priced in U.S. dollars) have jumped across the board except for coffee and sugar. Natural gas prices are up 18 per cent, West Texas Crude (WTI) is up 9.5 per cent and agriculture prices are up two to three per cent for corn, wheat and soybeans.

So, what to make of all this? Do we continue to melt up to 3,700 on the S&P 500 (the equivalent of the market peaks in 1929 or 1999) or, as speculated above, suffer a six-per-cent correction and then continue higher?
With stocks at high historical nose-bleed levels investors have to seriously consider how much they can afford to lose and decide on how much to invest in each instrument, whether or not they’re stocks, ETFs, bonds, cash, etc.
When buying a stock, you should always ask yourself these questions:

  1. Why am I buying the stock? You should have at least five reasons why you wish to own the company. Otherwise, don’t buy it.
  2. How does it fit in my portfolio? Avoid the most common mistake investors make: correlation risk. One company from a particular sector only.
  3. What are the risks? The risks should be well understood and each company’s risks should be different than other names in an investor’s portfolio.
  4. How much cash do I wish to own in the event this market sells off more than six per cent?
  5. At what point do you wish to enter the market again? After a 10 per cent, 20 per cent or 50 per cent correction? That discipline can help you avoid buying too soon and force you to think about entry prices on stocks you wish to own or add to a position.
  6. Are your dividends growing and at what rate? Is it greater than the historical norm of seven per cent? Is the growth rate offsetting inflation?

If you can answer these and prepare ahead of time, you’ll be ready for whatever comes our way.