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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Any thoughts on Peleton as an investment?

My understanding is that they are not yet profitable, but they are still expanding their exposure in North American households through an increase in their subscriber base. A recent BNNBloomberg article also indicated that they have made plans to improve the breadth of their exercise machine catalog, through offering multiple price points on the exercise bicycles that they sell (I also see that they sell treadmills in the US, but it seems as if they have not added this as a purchase option on their Canadian website at this time), as well as potential plans to offer rowing machines in the future. I have read separately that they made a recent purchase of a Taiwanese company by the name of Tonic, in order to secure their supply chain for equipment, and that they have established a relationship with a company by the name of Affirm, in order to offer monthly payment plans for their equipment.

The company is now trading at $27.86, about 4% below its IPO price of $29. I would imagine that the most meaningful revenue source for Peleton would be from its subscription base rather than its equipment sales, as subscriptions are recurring and maintaining video/interactive conent would probably not require as much in terms of input costs per dollar of revenue as would manufacturing exercise machines for sale.

My main concerns regarding this company is that the potential for competition is profound (both in terms of manufacture and sale of equipment, as well as in their subscription program for fitness training). On the positive side of things, they have built up brand recognition and loyalty, which is not easy; and goodwill is an important part of any company's valuation.

I would be using the proceeds from the sale of my holdings in Cineplex to fund this investment (about 2% of portfolio), so it would not change my exposure to the Consumer Discretionary sector.

As always, I look forward to your response. Thanks so much!
Read Answer Asked by Domenic on February 10, 2020
Q: Recent XYL results and the stock drops 7%. I've held for years and it has been one of my more volatile and poorer performing stocks. Yet even after today's action I'm up 15%.

I really want to own XYL largely b/c I firmly believe we'll need more 'engineered' water solutions. However, I'm ready to sell and try something different.

Please tell me why I should continue to hold XYL and not sell to buy WAT, AWK, DHR or and ETF like PHO.

Thx.
Read Answer Asked by Cameron on February 10, 2020
Q: Hi Peter and Crew
Thank you for your excellent work. We have PHO, PNG and GSI. Thinking of adding CTS to this mix. (this is our small cap fund) Love the growth in CTS and we can hold for five years. What do you think of the choice or any other ideas that may be better.
PS
Thanks for Shop:) wow!!
cheers
Ken and Cindy
Read Answer Asked by cindy on February 06, 2020
Q: Hi 5i team,

There hasn’t been a question on DOCU in many months. I know it is expensive on many metrics but that is the same with many tech stocks. Even in the past two weeks, with the market turmoil over the coronavirus, I have noticed that DOCU keeps making new highs. As you know, DOCU’s core product is the ability to sign all business, legal and real estate documents electronically. There is no need to meet with another human being, be in the same room with them and breathe their air. We can all just live in a bubble. I know I am going over the top here, but what are your current thoughts on DOCU? I have not seen any recent news. It is also one I follow for its takeover prospects by a big tech company.

Thanks again.
Dave
Read Answer Asked by Dave on February 03, 2020
Q: Hello 5i, notwithstanding the tragedy of the coronavirus, I would like to start taking full positions in 2-3 stocks that could benefit from a recovery. What are your thoughts on the DSG, OTEX, MSFT, KL? any other suggestions? Also, when is it a good time to start accumulating?
Thanks
Carlo
Read Answer Asked by Carlo on February 03, 2020
Q: Hello 5i Team,

I am looking to add a second stock in the Industrials sector of my TSX holdings.
I currently hold CNR. What would be your top 3 suggestions ?

Thank you,
TL

Read Answer Asked by Tony on January 30, 2020
Q: Hey guys,

Thanks for the portfolio update, I have Shopify at 6.2% and Xbc at 1.4%. For a "balance portfolio" does it make sense to sell 1% of Shop and purchase more Xbc?
Thanks again,
Jim
Read Answer Asked by jim on January 29, 2020
Q: Guys...I have some room in my portfolio for a few high risk, high reward stocks. Can you give me one or two from Canada and the U.S. that you like currently...this is long term money...doesn't have to be on your model portfolios either...thx
Read Answer Asked by dan on January 28, 2020
Q: I'm having trouble with the high valuations of some of today's star stocks. On top of that, and as illogical as it is, I have trouble investing in the these stocks after they have run so far. What 2 or 3 stocks are you guys watching at this time that are at beginning stages but have the potential to turn into stars like shopify
Thx
Read Answer Asked by Todd on January 27, 2020
Q: Hello 5i team,
I read that Artiza's director sold last week 1.9 million $ worth of stock. As well as two other executives exercised their options and sold.
Would you read anything negative ?
Between GOOS and ATZ, which one would you prefer for a long term holding I need more consumer discretionary in my portfolio. (I am 60 and will not require to access any funds).

Regards,
Elaine
Read Answer Asked by Elaine on January 27, 2020
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