Investment Q&A

Q: Portfolio Analytics is saying I need to increase consumer cyclical and defensive holding. Can you give me a couple of stocks in Canada and the United States with steady dividends and low risk. And a couple of ETF's too.

Thanks Greg

Q: Hello 5i Research Team,

David Berman's recent article in the Globe suggested that now may be a good time to buy beaten down stocks in the US home building industry (i.e. builders and suppliers). Would you agree? Either way, could you please rank the listed stocks for a 5-year hold for an investor with an above-average level of risk, and add any better names I've missed.

Thanks!

Q: Good morning, 5i team!

KH Home, Toll Brothers & Pulte Home all get a buy ratings from Credit Suisse lately. Your thought on adding for1 of these 5 for a 3 to 5 years hold. Thank you!

Q: On CNBC on Friday Tom Lee disclosed these 20 as his "Epicentre Stock Portfolio" and opined that the bottom is in. He seems to be quite revered and apparently his calls have been more correct than not. Could you list your best seven from this list that you would buy today in order. Any other comment of course welcomed as well - Ken

Q: Are there any sectors which are interesting from an evaluation point of view which should be added to nowadays? Are there any geographical areas which are in the same situation? Both are for longer term of 5+ years.

Thanks, Mike

Q: What are your thoughts on two of my US holdings? PulteGroup's for its homebuilding and financial services and WPX Energy and its debt or financial stability

Q: Stock has been doing well recently .I have a small position , is it better to sell and consolidate in another name, or I have some funds to make it a fuller position.
Thank you

Q: Hello Peter,

I've held PHM (Pulte group) for two years as a play on US housing and as a US consumer discretionary holding. Given RCLs dividend increase (announced today), would it be a better asset for growth and income? (also US discretionary - but I think is classified as industrial.)

PS when I search for info about Royal Caribbean (RCL) I am still getting information about Ridley (a company I know nothing about).
Many thanks!

Q: Thanks for your prompt reply and comments regarding my previous PHM post. I love this site.
To clarify what I should have said in ending: "the downside is thirty cents which brings the stock to zero, or a 100% decline, while the upside remains to be seen but has potential for multiples of the present thirty cent price".
OK, the moratorium begins now:).
Thanks.

Q: It is, of course, audacious to disagree with you considering your enviable success record and experience but I can't come to terms with your defensive posture regarding the fair and detailed member question concerning the rise and subsequent fall in PHM's share price. PHM revenues were $70M in 2015 and guided to about $130M this year - lower than originally expected. How many other companies in your universe would you eliminate from your portfolio if this was the case? I think you are being influenced by the stigma rather than the fundamentals and have no reason to be defensive about dropping this company. First, no stock picker is perfect and second, who could have anticipated the avalanche that has consumed this company?
PHM is strictly a noise story. Period. The two new bosses have hunkered down and not made themselves available to combat the negativity this stock is experiencing. Good for them. Results should be the only barometer.
Every guest on BNN, except Ryan, has slammed the stock. The call-in show host inevitably pipes in , unsolicited, to add the medicare reduction while never adding a positive comment about a company that has had only one revenue reduction quarter in it's entire history. Inevitably, as soon as a caller asks about PHM, within a nanosecond, hundreds of thousands of shares appear on the sell side as short sellers stalk this company, taking advantage of the stream of undefended comments. At the end of the trading day, hundreds of trades transpire within the last few moments. There is a concentrated effort, taking advantage of this hysteria, to drive the share price into oblivion.
I was glad you dropped PHM and I wish BNN would declare a temporary moratorium on questions. Give them a year and we will see a company whose share price reflects the fundamentals rather than the noise. I am joining my suggestion by refraining from commenting again on this stock for 12 months. It's just time to let the company emerge from the cloud and see if they can prove their worth to investors. The downside is now thirty cents. What is the true value of a $130M revenue generating company? We'll see and good luck to fellow patient investors who see value in what is really a great idea - servicing seniors as their health declines.

Q: Hello team again,

I have been reading on this one and the question now is: In the long-term, what is the likely outcome? Is this company going to survive? I am sure no one knows but based on your experience what is the best course of action now if you bought in at 1.15? Would you average down if you were a long term investor and wouldn't mind sitting idle for the next 5 years?

So to make it easier for you: In your gut, do you feel this company back to $1.15 in five years or down to $0.15? And if the former is true how long would you wait to average down if at all?

Thank you very much indeed!

Q: Given PHM's most recent news release regarding guidance and the decision to close Logimedix - would you advise taking any action?

I own a considerable number of shares with a cost base in the 60 cent range and would like to know if you advise selling or continuing to hold.

Q: I read the PHM guidance thoroughly and, based on over 30 years of entrepreneurial experience, I came away with the feeling they are executing as they should considering the challenges they have acknowledged. When a business experiences a decline in sales, it is not always negative. Trading dollars is negative but trimming unprofitable products saves cost of sales including staff, product cost, etc. and those funds can be used to grow the more profitable side of the business. Unlike many failing business models, PHM has cash and limited debt. Usually a failing business cannot resurrect itself due to debt burden realized from declining revenues. PHM went from $40M to $32M in what will most likely be their worst quarter. Recalibrating with a more defined product line and costs under control are exactly what any business consultant would tell them to do. Now they can profit from their sales which they say will rise throughout 2016 and be in a position to add incremental acquisitions from their cash flow. Finally, the management team has the experience to see the shortfalls of the company and deal with them head on. I support their plan and remember they are heavily invested at $1.47, The senior management owns over ten percent of the company.
This stock has been the victim of rumour, the publicly suggested sale of the company and negative comments for months. They are still standing and today they turned a corner. If they can execute as they have to date, I can see this company growing significantly over the next two years. Today, someone has bought well over eight million shares from fed-up sellers. I am one of them. Do you see any eventual positive success from this viewpoint?
Thanks.

Q: Hello Peter, Ryan and team,

Would you pls. comment on today's (March 30) release of guidance for the current quarter.
Thank you,
Silvia

Q: Hi Peter/Ryan and Team, a follow up to your PHM answer just provided. The question is have you followed up with management for clarification regarding this 'hidden' information, considering PHM is in the growth portfolio? Any further insight from you would be greatly appreciated as I have slowly been building a position in PHM. Time to use caution on this one?
Comment: Hate the hidden way they provided this information and this in-of-itself should be a cause for concern!! Sorry, but this is Not management inexperience in my opinion! Seems calculated and the market is reacting! Thanks!

Q: ABNN guest just mentioned a 40% reduction in revenue in their ventilator business. Apparently it was disclosed but buried in the recent press release. Could you please confirm you confirm and comment. T

Q: Hey guys

Do you think it would be wise to average down on Phm at this level? I'm not in at the highs it once was but still thinking of averaging down and wondering if i should. Also is there anything else behind why it's performing like it is and being stagnant at the 52 week low? I mean besides the regular issues that the company has been trying to shake off? Thanks for your help.

Q: Peter,

Do you think the management team at PHM is competent enough to run a public company?

After listening to the latest earnings call, they can’t forecast the simplest of financial metrics namely revenue growth or gross margins. How can they run a company without this basic awareness of what is going on?

Thanks
John

Q: What are your thoughts on the recent year end financials. With the finances improving and new members added to the board, do you believe the stock will start to be re looked at. Many heavy hitters asked to see ALL these changes and year end numbers. Could you also speak to the balance sheet..cash on hand etc. Would you be a buyer around these prices.
Thanks Jason N

Q: I thought your comments about PHM regarding their revenues, plans and PR ineptness hit the nail on the head. It is distressing to see how they, on the one hand, can integrate the acquisitions and grow revenues and profits - a significant feat - and on the other hand, stumble on public relations. I keep reminding myself that hospitals are kicking people out "feverishly" and 10,000 people a day turn 65 in the U.S. In my Canadian hometown, we have an absolutely fantastic new regional hospital costing $500M in 2010 and beds have been cut by one-third in five years and staff cuts are heartbreaking. Clearly, we live in a new healthcare era and PHM is so well-positioned to capitalize. Is this not a bonanza waiting to happen if they continue to streamline their profitable operation to the point of maximum potential before getting back into acquisition mode? I think this model is so relevant today. Lately, the share price has been consumed and overpowered by traders but the long term prospects could be substantial. Frustration aside, what do you think?