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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: About 1 year ago we created an equal-weighted 'balanced' portfolio of 30 Canadian companies in a non-registered account. Most were chosen from companies either covered by a 5i research report or included in a 5i model portfolio. The remainder were chosen, based on the 5i Q&A section, from what appear to be 5i sector favourites. All purchases are made with the intent to be long-term holds (10+ years). As well, we intend to increase our investments over the next 2-3 years, and then adjust over time as needed. Currently the amount invested represents ~40% of the eventual total.

Although a goal is to keep the portfolio roughly equal weighted, of the 30 companies, the following 14 were acquired in 3 purchases (full position) and currently have weights in the 2.31% (SHOP) to 5.00% (ATA) range for an average of 3.71%: CSU, MG, GSY, WSP, LNF, ATD, ATA, SLF, BAM.A, BIPC, FTS, DOO, SHOP and TFII. The remainder were acquired in 2 purchases (2/3 position) and currently have weights in the 1.98% (BEPC) to 3.17% (TCN) range for an average of 2.56%. So, overall, the weightings currently range from ~2% to ~5%.

Over the next 6 months we will invest another ~25% of the eventual total. As we make additional purchases, we need to strike a balance between keeping the weights roughly equal while taking advantage of market opportunities. Please provide some broad guidance/wisdom.

Of the 30 companies in the portfolio, which 10 would you have the highest conviction in today? Please rank them.

Are there any of the 30 that you might consider as candidates to be replaced because there are better options, and if so, what replacements would you suggest and why (disregard tax considerations)?

What additional 3 Canadian companies might you consider adding to the portfolio and why?

As always, thanks for the great service!
Read Answer Asked by Peter on February 01, 2022
Q: Hi Guys
I'm interested in buying some ETF. Is there a place where I can compare the different ETF's. I'm looking at buying in different areas Canadian US International etc. Are there any you suggest I should look at. Primarily interested in dividend paying ones but some growth as well

thank you
Steve
Read Answer Asked by Steve on February 01, 2022
Q: Hi,

When reading questions or watching the news, I hear a lot of financial ratios being referenced to. I hear P/S, P/E, etc.. of a stock being high or low, but what is that in comparison to? Is it relative to the historical sector average or vs current peers? There are just so many metrics that it is kind of overwhelming for the average investor. I understand that if you're a professional financial analyst focusing on a certain sector doing this everyday, you know the important valuation metrics to look at within all the companies within a sector. But what about for us general investors that like to look at some of these important data points that hold stocks in various sectors?

At times, I want to compare important metrics of companies in similar sectors when looking at the best investment, say for example in tech semi conductors NVDA vs UCTT vs QCOM. Or if I wanted to compare ATZ vs GOOS VS DOL in a different sector. What are the best data points to compare? For example, div yield, P/E (NTM), P/S (NTM), EV/EBITA (NTM), FCF/Share (FY), PEG, EBITA CAGR (5Y), REV CAGR (5Y), Net Debt (FY), etc...These are just some examples that I see. I'm more a growth investor so I assume Rev CAGR would be an important data point to watch, for example. I would imagine that you compare different data points when comparing companies in the tech sector vs if you are comparing stocks within the energy sector. Such terms like operating cashflow, net cash, EPS/REV growth, debt, I hear lots from your answers so should these data points always be on my screen? Or is it more important to look at the data points in relation to how they are trending vs historical years and quarters of that specific company.

I have a watchlist of my portfolio with stocks in all different sectors that I look at daily and would like to keep track of important data points at a high level. For example, I have EBITDA(FY) as one column and can easily sort it so I can see which of companies are unprofitable, or CFO so I easily sort that to see which companies have negative cash flow from operations. What would be on your screen if you had to pick say 10-15 data columns and what is your financial analysis process like?

Thanks!
Read Answer Asked by Keith on February 01, 2022
Q: In a rising interest rate environment, what fixed income products perform relatively better? Would US TIPS or floating rate loans be an acceptable option?
Thanks
Read Answer Asked by David on February 01, 2022
Q: You answered my question this morning, asking which stock to put into a RSP, as if I asked for stock to put in TFSA. Very different tax consequences.

What would I put in RSP from this list? I would think a stable but slower growth choice could work well.
Read Answer Asked by Brenda on February 01, 2022
Q: Hi folks. I am at a 47% loss in a registered account. It now is only a small percentage. Might it be a good idea to sell and circle back in about a year. What could be a better replacement?
Also January often tells us what kind of an investing year we will have as does the 2nd year of a presidency. What are your thoughts? It appears to be setting up for a tough year.
Thank you for your guidance as always
Read Answer Asked by El-ann on February 01, 2022
Q: What are your three highest conviction growth stocks from your Growth Portfolio at this time. This for a long term medium to higher risk for my TSFA. I already have all the stocks in the Balanced Portfolio.
Read Answer Asked by Steven on February 01, 2022
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