Investment Q&A

Q: Hi 5i Team,
Pls comment on InMode preliminary 2nd Q result and this company going forward. Why this stock is trading at such low PE 12x ?

I bought a half position, time to add?

Thank you for your professional advice as always.

Q: Hi, ServiceNow stock, a large US Enterprise Digital Solutions provider company, dropped 12%, Today, after CEO's comments, last evening on Mad Money, warning about the macro headwinds faced by a continuously extra strong US Dollar, by Technology companies, particularly those with large enterprise customers, around the world. Some of the comments are as below:

" You’re at 41-year high inflation. The dollar right now is the highest it’s been in over two decades. We have interest rates rising. People worried about security. You’ve got a war in Europe. So, the mood is not great,” McDermott said in an interview that aired on “Mad Money” after the closing bell on Monday.

“You’re going to see the headwind of the dollar right now against well-known technology brands,” the CEO added. “No one’s going to outrun the currency right now.”

Shares of ServiceNow, which helps companies and organizations digitize their workflows, fell 13% on Tuesday after McDermott’s comments, which were meant as an overall industry observation, not ServiceNow-specific news due to the company being in a quiet period ahead of reporting its latest quarterly earnings on July 27. "

“When you think about energy, and the dislocation caused by the war in Europe, and this reprioritization I’m talking about, you’re going to see longer cycles [to close deals] in Europe. We saw that,” McDermott said. “But this doesn’t fundamentally change the narrative that tech is the only way to cut through the crosswinds.”

The reprioritization he’s referring to is the increase in demand for a fast return-on-investment — another symptom of cautiousness in the current environment.

“There’s a new level or prioritization in the enterprise. And I have seen this, actually since we last met, Jim, hitting a new gear. Where companies are first saying ‘which platforms do we want to bet on,’” and then try to sort their priorities, McDermott said.

“There’s one filter on all of this now. And that is fast return on investment. And if you can’t put an architecture in there that gives the customer a fast ROI, chances are, you’re going to get postponed,” he added.

Stifel said in a note on Tuesday that it believes the company is “likely” to lower their expectations when it reports earnings, citing McDermott’s comments on reprioritization. The investment bank also expects other companies across the industry to follow suit in the coming weeks.

There was chatter that Today's 4.10% decline in MSFT and 4.61% in Sales Force, which was ugly, was not company specific but in reaction to this macro warning,

Most large Technology will start reporting in a few weeks time.

Some strategists were seen on CNBC talking about the" Generals" being the last to drop and MSFT's sharp drop today was noticed by many.

Do you agree with above comments/sentiments ?

We are trying to assess, if these companies, in your view, are likely to be faced with similar headwinds - CSU ( worldwide revenues), TOI ( Europe) and SYZ ( >55% US rev ), for all those reasons. And if you think, they are not immune to this, is there any caution warranted, or is it prudent to reduce our exposure to a more reasonable level, at this time.

Thank You

Q: Hi,
I find it useful for me to monitor certain ETF ratios as a way of seeing whether or not rotation is taking place - such as: IWF:IWD - to see if growth is being favoured over value, as an example.
I have a harder time understanding the concept of 'credit spread' with regards to the bond market and am wondering if there might be a pair of ETF's that could be used in a similar way to show a ratio that indicates whether or not corporate or junk bonds are being favoured - possibly LQD:JNK?
Is looking at a ratio such as this a good way to track it? Would it be better to just monitor the difference, as a percentage, between the two ETF's over time?
I'm open to your wise counsel, as this isn't an area I have any expertise in - and I am finding it hard to educate myself on it with any confidence in some of what I am reading on the wilds of the internet.
If you feel this is something to benefit others, feel free to make it public.
Thank you,
Dawn

Q: I currently own XHC and would like to add another healthcare ETF that is in Canadian $, which one would you suggest or best to buy a US ETF?

Thanks

Q: Which one will have the most bounce if market recovers, Jim Cramers said market will bottom tomorrow, your thought please , thanks

Q: Dear 5i,

What percentage of the SP500 index represents non USA exposure?
I read that approx. 30% revenue may come from foreign companies.
thanks for your advice.

Q: i am wondering why there is such a disconnect between the oil price and canadian energy stocks.
every oil stock seems to be selling like oil is 50-60 dollars when in reality it is 96. today and has been over a 100 for months.
furthermore both the iea and opec came out today on bloomberg and said the energy crisis is going to get worse.
in addition its quite obvious that opec has little spare capacity.
and if the war ends, why would the sanctions go away after what russia did to ukraine.
and the amount of free cash flow the cdn oil companies are banking is mind boggling.
and history shows demand destruction in a recession in minimal to zero.
so why the huge disconnect-it cant be because of china lockdowns which are temporary.
can you feed some light on the above.
dave

Q: Man I hate seeing this go down almost every day. Do you have any updated thoughts on it? Thanks,

Jason

Q: Hi, These two companies, which are leaders in the packaging industry ,and enjoy a positive view with 5i, have seen their share prices perform quite differently. Over a 5 years period, RPI has outperformed CCL.b significantly, but during past 12 months and more recently, CCL stock has shown signs of steady comeback, while RPI price continues to languish at 50% below its peak of $85, reached in Oct, 2020. We are aware that two companies operate in different segments of packaging sector and while CCL has a larger geographical reach, RPI's operates in North America, primarily. We used to own CCL.b few years ago, but sold our position and replaced with RPI units, about 3-4 years ago. Could you make a comparison of the two companies, with respect to their size, leverage/debt, business/growth prospects, insider ownership, current valuation and risk to assess, how they compare/rank on these metrics and the reasoning. Also today if you own them, what will be the objective - Income or Growth or Both for each. Thank You

Q: Hello 5i,

If someone was seeking safety and wants to either ladder or 1 term some GIC's, would it be a good time to start seeking the best rate be after the July 13-22 BOC rate announcement? It looks like Sept 7-22 is the next rate announcement so I was thinking even if another 0.50% was to occur not all would be passed onto GIC's.

Would you recommend a GIC strategy / company in Canada. The money I want to buy GIC's is from a personal house so principle safety is key. Since costs are rising so much I won't be using the money for 2-3 years even if the housing market cools it will take many quarters to normalize costs.

Q: The dot-com bubble of 1999/2000 exposed investors to risk that legendary investor Sir John Templeton called "temporary insanity" ultimately resulting in Nasdaq's 78% decline from it's high. Just over 20 years later, one could argue, the same sort of "temporary insanity" took hold and we have now seen only a 30% decline with many high-flyers losing 75%+ of their value yet for some reason still are getting recommended. An current example would be Lightspeed. It went public at $19 and ran all the way close to $160, up almost 800%. Now it's around $26, down around 80% from the high. Upstart would be another one.

Solid companies such as Cisco & Qualcomm survived the dot-com crash but never reached the earlier stratospheric valuations again.

Question: What makes this time any different for growth stocks? Or should growth investors really temper their expectations? I can't imagine these and many other surviving companies reaching those lofty levels again....and certainly not in the near future.

Q: Always looking for return, it seems with the euro almost or at parity it might be an opportunity to put a modest amount of cash into the euro at this time. Do you consider this a good idea or is there a stock or ETF that would do the benefit the same from a future growth point of view?

Peter

Q: Canoo Inc NASDAQ: GOEV does this company have the potential to be another Tesla? Any insider buying and how good is management?

Thank you.

Q: Can you recommend one or more etf's that would provide exposure to the health industry including medical devices, genomics, biotech, big pharma etc. Covered call etf's in these sectors would also be of interest. Thanks

Q: In a question today regarding top health care stocks you mentioned abbivie as one of the top choices but not lly. I know that in the recent past you were strong on lly over abbevie. I bought lly at that time, in fact, and profited quite well from the purchase. Thank you. My question is what made you pinpoint lly as a good prospect earlier on and what brings you to not mention it now in response to the question on top health care stocks?

Q: I am participating in an investment challenge at work. We all pick a portfolio of 1 to 15 CAD or US stocks July 18, 2022 and revalue them October 31, 2023. Whichever portfolio grows the most in CAD wins a cash prize. Can you give me any suggestions of stocks poised to "light it up" over this time period. Note that there is no entry fee so I can invest in extremely risky volatile stocks.

Q: It seems many analysts feel that Health care is a good place to be going into the next 1 to 2 years, do you agree?
Could you name your top 5 Health Care Names, Canada or US?

Thank You

Q: Given Brookfield's backing of SPB, would you be comfortable holding it instead of a much larger company like AQN?

Thanks.

Q: followup to my question from yesterday about dnd. you replied
The Link deal would be highly accretive to earnings, and set DND up for very strong market share and growth. That being said, with the long delays, regulatory issues, and the market, we do not think many investors really think this deal is going to close.
has this been your thinking when you have recently rated, on several occasions, dnd as one of your top growth picks? has your view changed with the apparent demise of the link deal?

Q: CAE looks to have a roughly 50% revenue split from civil aviation and defence - would you consider it comparable to Raytheon without having to be exposed to currency conversions via buy/sells? Thanks