Bryden Teich on BNN Market Call – May 11, 2018


Bryden was on BNN’s Market Call for the first time and spoke about North American equities! View the segment here if you’re having trouble viewing the video.

Paul Harris on BNN Market Call – March 12, 2018


Paul was on BNN’s Market Call yesterday afternoon. View the segment here!

credit: BNN.com

MARKET OUTLOOK

The global economy keeps seeing some real improvements. Economic data continues to better, like the ISM index, which is expanding. We’ve seen positive readings in retail sales, industrial production, the job market and consumer and small business confidence. We’re also seeing strong earnings growth and topline revenue growth instead of the deterioration in margins that some have been expecting. As a result, many of the central banks around the world are looking to slow quantitative easing (QE) or increase rates. However, we believe we’ll see low inflation and low interest rates for some time as central banks will not want to run the risk of pushing the economy into a recession. With the S&P forward price-to-earnings at 17.4, I don’t think the market is expensive.

At the margin, we see:

  • Higher rates as central unwind QE.
  • Higher inflation, but not extreme numbers.
  • Strong earnings growth, which can sustain valuations and see targets increase for the S&P and TSX.

I do think we will see more volatility during the year and that it will be a buying opportunity.

TOP PICKS

FIRSTSERVICE CORP (FSV.TO)

FirstService Corp has recently spun out of Colliers International. The company focuses on residential property management and services. It has room to grow market share in the U.S. in what remains a very fragmented business. Trades at 28 times next year’s earnings and yields 1 per cent.

BANK OF AMERICA (BAC.N)

Bank of America is one of the largest banks in the U.S. holding 10 per cent of all deposit in the country. The bank continues to reduce cost through reduction in headcount and technology. They continue to improve their capital base with Tier 1 ratio at 13.60 per cent. The stock trades at 1.28 times book value and 12.75 times 2018 earnings. The company is buying back stock and will be increasing its dividend over the next several years from its present yield of 1.88 per cent. We think the intrinsic value is $50.

DOLLAR TREE (DLTR.O)

Dollar Tree operates discount variety stores offering merchandise at a fixed price. The company has 14,334 stores in 48 states and in Canada. The stock trades at 16.73 times 2019 earnings, 10.3 EV/ EBITDA and a free cash flow yield of 5.7 per cent.

Bryden Teich on BNN Market Call – March 1, 2018


Bryden was on BNN’s Market Call for the first time and spoke about North American equities! View the segment here.

 

Bryden Teich on BNN Market Call – January 12, 2018


Bryden was on BNN’s Market Call for the first time and gave his top picks! View the segment here.

credit: BNN.com

MARKET OUTLOOK

After a strong year of global growth in 2017 we see this trend continuing into 2018. This trend should bode well for cyclical economies like Canada. That being said, the risks of NAFTA uncertainty, as well as a slowdown in the real estate market amid tighter mortgage rules, may create a headwind into the new year. However with the strong global growth we are seeing, commodities look attractive at these levels, which would be a benefit to the Canadian stock market. The U.S. market looks like it is poised to enter a melt-up phase on the back end of strong economic growth as well as corporate tax reform, which will directly benefit earnings. Inflation still remains an enigma but with tight labour markets in both Canada and the United States, our bias would be to higher interest rates and a tougher environment for the bond market in 2018.

TOP PICKS

CVS HEALTH (CVS.N)

We like CVS because of the consistency of their free cash flow and their strong history of buybacks and dividend increases. With the proposed acquisition of Aetna they are vertically integrating themselves into a comprehensive health care benefits manager in addition to their legacy retail pharmacy business. They are also set to benefit significantly from the tax reform in the U.S. as they currently pay the highest marginal tax rate. The shares trades at 12x earnings and yield 2.5 per cent.

BLACKSTONE GROUP (BX.N)

We like Blackstone because of the significant earnings power of their underlying asset management business. They had a record fundraising year and now sit with $100B in funds to deploy and have had very strong performance in their underlying segments. They also have a significant opportunity to grow their infrastructure fund over the next several years. The shares currently trade at 11x earnings and yield 6.7 per cent.

ALIMENTATION COUCHE-TARD (ATDb.TO)

We like Couche because of their strong earnings growth after their recent acquisitions. They are well diversified outside of Canada with 85 per cent of gross profit being generated between the U.S. and Europe. There is still a large opportunity for them to continue to consolidate the gas bar/convenience store space as it remains highly fragmented south of the border. Shares trade at 17x earnings and yield 0.6 per cent.