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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: Hi Peter, Ryan, and Team,

I am overweight in Consumer Staples and underweight by an almost equal dollar value in Information Technology.

Present holdings in Consumer Staples include ADW.A, ATD.B, ECI, PBH and SAP. (SAP is the only one that's down in value).

Present holdings in Info Tech include CSU, ENGH, KXS, OTEX, and PHO (PHO is the only one that's down in value).

Which stocks in the Consumer Staples sector would you trim/sell, and which stocks presently held in the Info Tech sector would you add to at this time? (If there are compelling reasons to add more Info Tech stocks, your suggestions are welcome.)

Also, is the thesis still the same for SAP? It's been a fairly disappointing stock, but of course your great recommendations have really enhanced our overall portfolio. Thank you!

As always, I appreciate your valued advice.

Please deduct as many question credits as you deem necessary.
Read Answer Asked by Jerry on July 17, 2017
Q: Hi 5iResearch Team,

Ethical issues aside, I am looking at investing in Atria Group the main businesses of which are: smokeable products, smokeless products and wine. However, I am concerned about the law suits filed by US Federal Government a couple of decades ago against tobacco companies in the States seeking major financial penalties. Would you please provide an update on these law suits. Are they still on going? If they have been settled, are there still lingering issues and the Feds could come back in future and file more law suits?

As always good work guys and your help is much appreciated.

Harry
Read Answer Asked by Harry on July 17, 2017
Q: I am looking for an industrial income stock and am considering xtc and wsp. I think you would pick wsp because it is much bigger. I would like a yield greater than 3% and these two stocks yield just under 3%. I like the yield of Exchange Income, but am leery of the short situation. Would you please suggest a good industrial stock with a yield close to or exceeding 3%. Thanks.
Read Answer Asked by Richard on July 17, 2017
Q: CRH Medical dropped >28% on Friday. I see they repaid their loan to Crown Capital as planned and have taken out a new credit facility (to 2020), reducing their interest expenses from 12% to 2.5% and providing cheaper capital for a future acquisition (3.5%), http://investors.crhsystem.com/1881-2/.

This would seem to be a big positive - quite apart from the recent re-imbursement issue which doesn't seem to realistically reflect the actual impact of any changes (i.e. is more benign than the market has anticipated).

So why the 28% drop? I got in at $4.47 - your advice, please? I'm tempted to buy more but I am/ should be an income investor (ha!).

Thanks as always,
Heather
Read Answer Asked by Heather on July 17, 2017
Q: TD Waterhouse Action Notes Summary Report dated July 7 2017 about "Questions regarding the sustainability of CRH's reimbursement rates have contributed to a two month slide in CRH's stock."
Here's the meat of it.
" We expect a relatively benign outcome to the 2018 fee schedule, partly because of CRH's limited exposure to CMS funding. Our sensitivity analysis indicates that a 5% cut in the Medicare reimbursement fee could cost CRH ~1% in adjusted EBITDA. ....
CRH has limited exposure to MEDICARE- We expect CRH's operating performance to be largely insulated from CMS for two reasons. First, Medicare only represents 10 to 15 % of CRH's revenues. Second, CRH's dominant payers (the private insurers) employ different reimbursement protocols from Medicare. We estimate that commercial payers reimburse the 00810 code at 3X-4X the rate of government payers.
TD Investment Conclusion
We are maintaining our buy rating but reducing our target price to $10.50 (was $12).
Our rating is based on three considerations: 1) leadership in a defensive, growing segment of the U.S. healthcare services market: 2) high margin cash flow streams and: 3) expansion opportunities within CRH's core anesthesiology market.
Hope this soothes a bit!
Read Answer Asked by Clarence on July 15, 2017
Q: I know that you suggest Sun Life for a Canadian life insurance company, but how would it stack up against the potential of other life insurance companies in the US? Brian Acker recently recommended Met Life saying it was much cheaper than Sun Life. How would you compare Sun Life to US companies? Overall what Life Insurance companies would you invest in regardless of Canada or US?
Read Answer Asked by Kel on July 14, 2017
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