Investment Q&A

Q: Hi Peter and team,
What caused the stock's $4-5 fall this month, do you think? Any company developments?
Hola,
Mike

Q: I want to replace GSK with MDT, JNJ or UTX. Yield, weight and sector is not a factor here. Please give me your pick or just add more GSK. Thanks.

Q: Hi,

Down 40% on PUR.TO in RRSP <2% weight now. Was thinking of selling and with some cash in account taking 2-3% position in Algoma Central in it's place. Thoughts on this change and on Algoma in general now in light of new CEO's moves and valuation?
Thanks,
John

Q: Hi,
In further response to Michael's question on Boyd, the analyst's report on Boyd that you mentioned essentially said that Boyd was over-valued.

The following is an excerpt of that report, but please post only if you consider it appropriate to do so and feel free to redact the size should you choose:

Future EBITDA growth for Boyd Group Income Fund (BYD.UN-T) is "set to slow from very high levels as large acquisition opportunities become more scarce," said RBC Dominion Securities analyst Ben Holton.

Cautioning that the open-ended mutual fund trust's valuation is currently near the high end of its multi-year range, Mr. Holton said he's "sensitive to the risk of multiple compression." He initiated coverage with a "sector perform" rating.

"BYD has been consolidating the North American auto-collision-repair market, and has more than quadrupled its revenue base since 2010," he said. "However, we expect the pace of acquisitions will slow, and with it, the pace of EBITDA growth."

He added: "The roll up of Multi Store Operations (MSOs) has driven consolidation in the industry, but these opportunities are becoming more scarce and more expensive. The slowing of this growth channel is significant as 70 per cent of the stores BYD added since 2009 came directly from MSO acquisitions. We believe organic growth will remain strong and single store acquisitions will accelerate, but are unlikely to make up for the decline in MSO activity. Further, the foreign exchange tailwinds benefiting 2015 can’t be counted on in future years. Specifically, we forecast revenue will grow at a 13-per-cent [compound annual growth rate] and EBITDA at a 16-per-cent CAGR over the next five years, still solid, but a significant deceleration from the 35-per-cent and 40-per-cent respective CAGRs seen since 2010."

Mr. Holton set a price target of $72. The analyst average is $77.22.

"BYD is trading at near record forward multiples, which we believe is at odds with our forecast of slowing growth," he said. "Accordingly, we see the risk of multiple compression. Specifically, BYD has traded in a range of 10-12x [next 12 months] EBITDA since mid-2013, though through this period BYD was growing EBITDA at a pace of [approximately] 50 per cent annually. Through this period, we also believe investors were paying up for potential MSO acquisitions that were not explicitly in forecasts. BYD is still trading at the upper end of this range, despite forecasts for slowing growth as MSO acquisitions become scarce."

Q: What is your opinion on Kelt. Do you think it will survive the current low commodity prices and could it be a takeout target?

Q: I am holding about 15% cash heading into year end, looking for some beaten up stocks in the non-energy/non-resource sectors that have perhaps been unfairly punished in this market downturn, and represent decent value ("value" or "growth" names). For purposes of this filter, I prefer the mid-to-large cap names, with a decent and sustainable dividend. I am fully weighted in utilities, so looking more at financials (non-reit), consumer (discretionary or not), industrial, healthcare, or tech sectors. Would love to know favourites popping on your radar?

Part 2 - Similarly, any favourite small caps (non energy/non resource) at year-end "sale" prices? Will likely buy GUD soon.

Thanks for all the good work and advice. All the best for the holidays and 2016.

Q: Just a quick follow up to the question asked earlier by Kathleen in regards to moving AGU from US $ to CAD$, there will be no tax on the move of AGU because it has not been sold but there will be tax on the currency exchange I believe, selling US $$ at a gain I presume.

Q: Hi Guys,

Are there any fundamental changes at Gamehost to cause the current drop in price to $9.00?

Is it only an "oil problem" or is debt becoming a problem with less earnings and therefore less cashflow?

Is the dividend at risk?

Thanks for the input.
John

Q: Currently down on this one 10% now, and read you last reply of Nov.17-. For whatever reason tax selling must be out of the way by now, and I cannot find anything good on this one. I have read some tweets of insider selling, and wonder if I should cut my loses before it gets worse, and get on with life. I really hate selling at such large loses, but seems to be the story of my life lately.

Q: This stock is down over $9.00 today. I don't understand why in down days on the market this stock moves up and when we have an up day in excess of 220 points the stock drop. What am I missing here
Thanks

Q: At this time, the only healthcare stock I hold is a 3% weighting in CXR. I would like to add to this sector. My question is, after today's developments with Valeant, would you recommend initiating a small position? Any other suggestions are most welcome.

Thank you

Q: your comments on the drop in Boyd's share price today please.

Q: Hi Peter and Team,

Considering Valiant's announced deal with Walgreens today, what is the Team's assessment of VRX going forward? I am currently up 10% on the stock and I am thinking of letting it ride for now. Your comments will be greatly appreciated.

Harry

Q: Dear Sirs,

Looking for a current commentary on POU, noting its high debt burden-is this debt load insurmountable and nearing a point of being unserviceable? As well, could you please pass along a few names that have more reasonable debt that could offer some torque on a recovery in the underlying commodity.

Many thanks,
Brad

Q: Whats your opinions on the news of adding 32 new restaurant to the royalty pool , it should to their revenues quite alot

thanks

Q: Hello team, Did you manage to find out why the big drop on WSP?
Thank you!

Q: If I transfer a stock in kind to my RRSP account,is it advantageous to pick one that is down a bit that you think will eventually come back up(Altagas,Vermilion,etc)or Sunlife that I am up on price on.Thanks Don

Q: Having read so many questions recently from your customers citing down 20%, 50% and worse; and feeling the pain myself ... would it make sense as part of a "flight to safety" plan (tip the risk reward in my favor/minimise downside risk) to buy a real return bond fund - or something similar? Looks like the dividend is only 1.9% but short term that beats a lot of other choices.

Thanks. Merry Christmas and the Best of Years in 2016.

Q: These Dundee series 4 preferred shares tanked during the past week after Dundee announced plan to exchange them (redeemable in June 2016) to class 5 shares redeemable in June 2019) - http://dundeecorp.com/pdf/2015-12-10-QandA.pdf
The exchange incentives are clearly not sufficient considering the fact that these pref shares now have junk rating (re prefblog.com). What is the most concerning is that the company is now offering extra payment to shareholders who vote in favour of exchange (see Globe and Mail article here: https://t.co/HseE5rIvF8). I would never think something like this is even legal in Canada... What's your opinion of this?

Q: Over the past several months I have gone to 60% cash.
I have only 3 banks & 2 telecoms left in account.
Thinking now would be a good time to start getting back in.

If you had to buy any 3 Canadian stocks for a 63 year old conservative investor which 3 would you buy.

Thank you as always for wisdom.
Craig