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Investment Q&A

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Q: I have a decent holding in this co. and read your recent comments on Stella-Jones. There appears to be no logical explanation to sharp drop in stock price from a high of $54 to a low of $41.50 within a span of 4 weeks. Even on market up days, stock's advance is fairly muted. I feel that 20% decline could not be entirely market related. My suspicion is that market is punishing the stock due its association with railways. What percentage of its business is from railway ties? Utility polls business should be stable ? Is there a large short interest ? How is its valuation on current and forward basis? Do you believe it's an excellent time to add at current levels? Thanks
Read Answer Asked by rajeev on January 25, 2016
Q: In a response to a prior comment on this stock you mention how SJ anticipated "the upswing in the spending cycle" I guess for poles and ties. Your April report forecasts a 1 year Revenue growth of 10.4% vs 5 year growth of 25% p.a. and a more recent (Nov.) TD report of forecast 18% growth for 2016, which I can assume is partly extraordinary FX gains to date and partly acquisition based since Apr. What I wonder about is just how cyclical is this business and what a decline in the spending cycle of utilities and railroads might look like. TD forecasts only 7% YOY Revenue growth of 2017 vs 2016 but does not take into account any M&A activity. When was the last downturn in this business and how long did it last? I note they grew EPS in 2008/9 but were a much smaller outfit then. Thanks, J.
Read Answer Asked by Jeff on January 05, 2016
Q: Thoughts on currency hedging these days?

http://canadiancouchpotato.com/2015/02/04/stepping-back-from-the-hedge/

"McCreath sees the supply of oil as being the key determinant as to whether the Canadian loonie hits US$0.65, taking stocks down with it, or a perceived recovery of oil prices into 2017 enables Canada to outperform." Your thoughts and to What CDN companies do you like most that are US currency friendly? I will find it even harder to invest in good US stocks for 2016 (i.e. Disney, Costco, Monster Bev etc) since we'll lose out on the currency rate this year.
Read Answer Asked by Michael on January 05, 2016
Q: Just a note I recall reading approx. 1.5 years ago about SJ that came from SJ themselves.

SJ who makes hydro/telephone poles & railway ties out of wood said that the ~25 year life span of these items (my bad memory, but I think it was 25 years or it could have been a little longer) would need replacing starting in the next year or so, N.A. wide in general. This represented millions of pieces.

Since SJ is a major player in this industry SJ predicted , as could almost anyone who was aware of this scenario, that SJ would have increased volume and profits as a result for the next few years, which typically grows their stock price as we have started to see.

Ya, SJ.

Have a great day.

Also Loving the volatility of many stocks these last few days. Easy to make 5% to 15% in a few days with some extra cash based on technicals, for now rather safely.
Read Answer Asked by Stan (1) on December 20, 2015
Q: Hi, Stella-Jones stock has been quite strong for past 2 weeks with all time intra day high of $52. I also noticed some fairly large block trades starting at $49.75 and recently at $51.50. Do you think there is some new institutional interest in the company? Ram Forest Group is engaged in supplying timber to US residential homes market. Is this a positive ? How is the valuation of stock, versus, growth prospects of various segments of its business, railway ties, poles, residential lumber etc? I have a 3% position and considering to build up to 5%. Should I wait for the stock to settle ? Thank You
Read Answer Asked by rajeev on December 07, 2015
Q: On Sep 28,You chose the following stocks for my risk aversed 27 yr old daughter:SJ(Investment a/c),POW,CGX & ATD.B(Rsp)& CSU,BIN,MG & GIL(Tfsa).Please advise if the selections are still effective & any changes.Is this a good time to star?.How much has the strong gain in October taken from November & the rest of the year? Appreciate your usual great services & views
Read Answer Asked by Peter on November 27, 2015
Q: I just recommended the following to a niece who currently has ALL mutual funds . She wants some growth and income, but probably never wants to look at her investments . As she is likely to continue owning mutual funds, I suggested that she should start a brokerage account and buy the following bit by bit .

1. FINANCIAL BANKS ... BNS, TD or RY
2. FINANCIAL INSURANCE ... SLF or GWO
3. ETFs… XSP, CDZ in Canada , or VGG

What would you suggest ?
Read Answer Asked by Thomas on October 13, 2015
Q: I bought half a position on the recent dip but it seems to have recovered. Would you buy another half now or wait for another dip? I suppose this is one of those technical analysis questions and its probably like asking what the result of a coin toss is in advance but I thought you might have better insight than me on picking an entry point. I tend to be terrible at it.
Read Answer Asked by Andrew on August 18, 2015
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