Michael Sprung’s Top Stock Picks on BNN Bloomberg Market Call, July 16, 2018

Outlook:

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MARKET CALL: Michael Sprung’s Top Picks: July 16, 2018

Until recently, markets shrugged off political and geopolitical developments. However, investors were shaken in the latter part of the second quarter as tensions intensified regarding global trade in reaction to a series of tariffs and counter tariffs that were enacted. Global stock market volatility increased as investors exited positions in June and markets lost some of the gains that had been achieved earlier. It is becoming increasingly apparent that the US is no longer going to accept what it views as asymmetrical trade and military alliances as the status quo. This state of affairs has enormous implications for the US and its trading partners. Corporate profits would be severely impacted by a prolonged trade war.

In this environment, We would advise caution. Value rather than momentum will become more important in stock selection as investors seek to minimize risk on the downside. Investors should continue to seek well financed, well managed companies that are selling at attractive price levels.

Top Picks:

Manulife Financial Corporation, MFC-T, Owned personally and by clients, Last Purchase May 2, 2018 $23.47
Manulife is a leading Canadian-based financial services group with operations in Asia, Canada and the United States. The company is well positioned in Asia where they are experiencing high growth and profitability; 50% of Manulife’s core earnings stem from Asia. Under Roy Gori’s leadership, a new round of balance sheet optimization is underway emphasizing a more agressive approach to dealing with less profitable legacy businesses. Manulife has been lagging its peers recently, likely a result of some anticipated charges during this restructuring period. However, we anticipate that Manulife will benefit from rising rates, a flattening of the yeild curve and stronger results from Asia and Wealth Management. A renewed emphasis of cost efficiencies will improve margins over the next few years. The current yield of 3.7% is attractive.

ARC Resouces Ltd., ARX-T, owned by clients, Last Purchase March 9, 2016 $18.72
ARC in one of Canada’s leading conventional oil and gas companies with operations in Western Canada. Management is focused on the development of ARC’s high-quality long-life assets. Liquids rich opportunities in the Montney offer the prospect of higher margins. The expansion at Dawson Phase III was completed in mid-2017. Future growth in production will arise from completion of projects in Sunrise (mid-2019) and Dawson Phase IV in 2020. Arc has one of the strongest balance sheets amonst its peers with net debt to cash flow below 1.5X. The stock currently yields 4.1%.

Fortis Inc., FTS-T, Owned by clients, Last Purchase May 2, 2018 $42.45
Fortis is the largest investor owned gas and electric distribution utility in Canada with operations in the US and Belize. Over the next few years, Fortis is expected to significantly increase its rate base. Over the next five years, management anticipates capital expenditures in the order of $12.9 billion. The company is extremely well diversified by asset type, geographic location and regulatory regimes. Going forward, management’s focus is anticipated to be more on organic growth within its exisiting markets as opposed to M&A. Fortis has a history of dividend increases that are expected to continue. The stock currently yields 4.0%.

You can view the complete interview here>>

What is Successful Investing? Learn more here>>

Download Our Free Special Report – How to Hunt For Value Stocks. Michael Sprung will share with you 5 stocks set for long-term gains here>>

We believe that investment management is about managing risk, not chasing speculative returns. Like to learn more? Please contact us here>>

The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

 

Canadian Stock Picks – Michael Sprung on BNN Market Call Tonight

Outlook

2016 has been a year to remember for investors. The UK vote to leave the European Union came as a surprise to the pundits, media and the investment community only to be shocked again as Donald Trump won the presidential race in the US. Then, despite all the opinions to the contrary, the US stock market did not go down but recorded the longest running post election rally in history. While all of this was occurring, the European migrant crisis persisted causing vexation within the local populations and spurring more radical political movements. A disturbing trend from an investor’s point of view has been the rising volume of anti free trade and globalization rhetoric. The underlying financial problems within the European Union with respect to Portugal, Italy, Greece and Spain remain unresolved as if politicians are hoping that a “deny and delay” policy will push these crises onto future governing bodies. Other issues that continue to persist include disturbances in the Middle East (particularly Syria), Chinese hegemony in the South China Sea, Russian incursions into the Ukraine and Syria (and maybe even US politics), etc.

Canadian Stock Picks Alaris Royalty ADARC Resources ARX, AGT Food and Ingredients

Canadian Stock Picks – Alaris Royalty Corp, AD, ARC Resources Ltd, ARX, AGT Food and Ingredients Inc, AGT

As we head into 2017, we will carry all of this baggage with us as well as face many new, yet unknown disruptions as we do every new year. While it is not known what the longer term consequences of a Trump presidency will be, the US economy is expanding and it is unlikely that policies would be introduced to intentionally stunt that growth. While investors played a waiting game with the Federal Reserve in 2016, it appears that there is now confidence in the strength of the US recovery to allow interest rates to increase. In Europe, despite problems in a number of areas, the overall economy is exhibiting signs of more stability and even some growth. While growth in the emerging economies has slowed, growth relative to the developed world is robust producing greater wealth and higher demand for goods and services.

Technology continues to reshape our world in an ever accelerating fashion. There will be winners and losers in this trend, but change is inevitable. 2016 is still fresh in our minds. 2017 will bring its own shocks and surprises. Investors will prosper if they stay fast with their discipline and do not get distracted by the turbulence that surrounds them. We wish everyone a healthy and prosperous New Year.

Canadian Stock Picks

Alaris Royalty Corp, AD-T, Owned personally and by clients, Last Purchase November 2 2016 at $19.84

Alaris has undergone a challenging year. Since the beginning of 2016, problems in some of the companies in which Alaris had invested dragged on without satisfactory resolution . Since July, more problems came to light with some write-downs. The share price declined steadily as investors became concerned with the sustainability of the dividend and Alaris’ debt coverage ratios. Throughout this period, management was negotiating workouts with the companies with issues. At this time, positive resolutions to many of the issues appear to be in sight. The Company has expanded its financial capacity and successfully initiated investments from a new small cap division. The dividend appears more secure now and we anticipate that upward revisions to the dividend will be forthcoming in the years ahead.

ARC Resources Ltd., ARX-T, Owned by clients, Last Purchase March 9 2016 at $18.72

ARC in one of Canada’s leading conventional oil and gas companies with operations in Western Canada. The recent sale of assets in SE Saskatchewan at Weyburn and Midale will act to further strengthen an already strong balance sheet as well as free up capital to be deployed in the acceleration of 2017 drilling plans in the Montney region. ARC has been disposing of non-core assets as management concentrates on more profitable production opportunities. Management has been diligent in capital management throughout the commodity price downturn. A dividend increase by late next year may be forthcoming with the balance sheet improvement.

AGT Food and Ingredients Inc., AGT-T, Owned personally and by clients, Last Purchase December 18 2014 at $26.50

AGT is a leader in pulse processing for export and domestic markets. The company has had notable success in diversifying into food ingredients, an area that is facing increasing global demand. 2016 was declared by the United Nations to be the International Year of the Pulse, highlighting the growing global demand for pulses. Although pulse production in 2016 has been at record setting levels, harvesting has been later than anticipated pushing revenues forward. Export demand is growing, and AGT has been expanding its pulse handling and food ingredient production capability. Ingrdion, a distributer of AGT’s pulse base flour and ingredients, has made two significant acquisitions in the specialty ingredients portfolio lending confidence to AGT’s expansion in his area.

What is Successful Investing? Learn more here>>

Download Our Free Special Report – How to Hunt For Value Stocks. Michael Sprung will share with you 5 stocks set for long-term gains here>>

We believe that investment management is about managing risk, not chasing speculative returns. Like to learn more? Please contact us here>>

The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

 

Market Outlook & Top Picks – BNN Market Call Tonight, Feb. 4, 2016

BNN Market Call Tonight – Market Outlook

Investors’ concerns came to the forefront during the first month of 2016 as many of the global stock markets posted negative returns. Fears of slowing economic activity precipitated much of this sell-off as indications of weaker conditions in China and more countries adopting negative interest rate policies (notably Japan), less than anticipated economic indications from the US and a technical recession in Canada appeared to corroborate this negative sentiment.

In this environment, industries are transitioning as many companies face economic hardship. Within the energy and metals markets, producers have cut back capital expenditures, reduced expenses and lowered or eliminated dividends to a significant degree. Consolidation is beginning to occur within these industries along with increasing asset dispositions at distressed prices. Fiscal realities will eventually cause Saudi Arabia and other large oil producing nations to come to terms with continuing to feed oversupply while running massive budgetary deficits. These actions will serve to re-balance supply/demand factors along with the reduced supply stemming from the lower level of capital expenditures.

As we enter the next reporting period, the effects of the strong US dollar will be reflected in the profitability of US companies doing business abroad. Margins will also come under pressure as wage demands increase while low inflation undermines the ability to increase prices, especially with growing substitution from countries with weaker currencies. Business leaders will be prompted to devote more capital to research and development to regain longer-term competitive advantage.

In Canada, the effects of the downturn in the energy and mining sectors are still reverberating throughout the economy. We have seen a pull back in the prices of securities in the financial, consumer discretionary and other sectors that could be further impacted by the fallout. Some relief was evident from the neutral stance of the energy royalty review announced by the Alberta government in the face of current conditions. We can only hope that the federal and other provincial governments will exercise similar restraint. At the federal level, we enter this period in a strong fiscal position.Canadian industry should derive some benefit from the weak Canadian dollar to the extent that they export products and services.

During this time of transformation, investors have the opportunity to reposition their portfolios and invest in those companies with the financial and managerial wherewithal to take advantage of current conditions and prosper.

Michael Sprung BNN Market Call Interview Market Outlook Top Picks

Michael Sprung BNN Market Call Interview: Market Outlook and Top Picks

BNN Market Call Tonight – Top Picks:

Bank of Nova Scotia, BNS-T, Owned personally and by clients, Last Purchase December 23, 2015 $57.16

The Bank of Nova Scotia is the most international of the Canadian banks with branches in the Caribbean, Central and South America. The Canadian banks have been impacted by the recent volatility in the markets. BNS is now selling at levels that long term investors should find attractive as the premium valuation has fallen. The dividend yield is now greater than 5%

ARC Resources Ltd, ARX-T, Owned by clients, Last Purchase December 17, 2015 $15.95

ARC Resources Ltd. is a Canada-based oil and gas company. The company’’s business activities include the exploration, development and production of crude oil, natural gas and natural gas liquids in five core areas across western Canada. The Company is also engaged in the Sunrise gas plant construction. Its operations are focused in five core areas across western Canada. ARC Resources has a strong balance sheet. The shares currently yield 6.6%.

HudBay Minerals Inc., HBM-T, Owned Personally and by Clients, Last Purchase December 23 2015 $5.71

HudBay Minerals is one of Canada’s leading producers of zinc, copper and precious metals with operations in Canada, Peru and the US. Constancia, a major copper-molybdenum-silver mine in Peru, has been ramping up production over 2015. It is expected that recoveries will improve as mill throughput and head grades have exceeded expectations. With other projects coming on stream over the next few years, we anticipate that valuation levels will increase.

What is Successful Investing? Learn more here>>

Download Our Free Special Report – How to Hunt For Value Stocks. Michael Sprung will share with you 5 stocks set for long-term gains here>>

We believe that investment management is about managing risk, not chasing speculative returns. Like to learn more? Please contact us here>>

The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

 

BNN Market Call Tonight Interview: Market Outlook and Top Picks

Market Call Outlook:

After a number of years of positive performance, North American markets are looking a stretched. In Canada, the retreat in energy prices continues to reverberate through the economy. In the US, valuations are appearing somewhat on the high side and investors are wary of any impending interest rate hikes. Given the strength of the US dollar, we do not believe rate hikes are likely in the immediate future. Despite the slower rate of growth in China, the market there continues to reach new highs despite falling export and import levels.  Commodities have been constrained by the anticipated lower demand levels from China. The European economy appears to be stabilizing to some degree with the obvious problems in Greece, Portugal and Spain still weighing on investors concerns. In this environment, we would not be surprised to see a pullback in the markets that would afford investors the opportunity to find better values.

Market Call Top picks Michael Sprung Alaris Royalty ARC Resources CAE Inc

Market Call Top picks from Michael Sprung: Alaris Royalty, ARC Resources, CAE Inc

Market Call Top Picks:

Alaris Royalty Corp. (TSE:AD, Mkt cap 993.91M, P/E 17.42, Div/yield 0.12/4.86, EPS 1.77, Shares 32.18M) Owned by Clients: Last Purchase May 28, 2015, $31.62
Alaris Royalty is a unique investment firm that invests  in a diversified range of private companies with solid long term histories and stable management teams. The nature of the investment allows Alaris to participate in future growth while  the entrepreneurs maintain control provided certain agreed upon benchmarks are met.  Management has had a successful track record in identifying good investment opportunities. Last week, management announced the largest investment to date in a construction firm in  Texas. As investments and cash flow have grown, dividends have increased. We anticipate that investors will continue to participate in Alaris’ growth.

ARC Resources Ltd (TSE:ARX, Mkt cap 7.42B, P/E 19.82, Div/yield 0.10/5.50, EPS 1.10, Shares 340.03M) Owned by Clients: Last Purchase May 28, 2015, $22.80

ARC Resources is a Canada-based oil and gas company. The Company’s business activities include the exploration, development and production of crude oil, natural gas and natural gas liquids in five core areas across western Canada. The Company is also engaged in the Sunrise gas plant construction. Its operations are focused in five core areas across western Canada. ARC Resources has a strong balance sheet and the dividend is well covered even at current commodity prices. The shares offer an attractive yield of 5.5% at current prices.

CAE, Inc. (TSE:CAE, Mkt cap 3.98B, P/E 19.72, Div/yield 0.07/1.88, EPS 0.76, Shares 267.18M) Owned Personally and by Clients, Last Purchase August 21, 2014, $13.45

CAE Inc is a Canada-based company that provides modelling, simulation and training for civil aviation and defence. The Company has a good balance of customers between military and civil applications. CAE has invested over the last few years in expanding training facilities in anticipation of a pending higher turnover in pilot retirements over the coming years resulting in greater demand for training services. As such, utilization rates should increase as capital expenditures are reduced. CAE is well financed and managed.

You can view the complete video here>>

What is Successful Investing? Learn more here>>

Download Our Free Special Report – How to Hunt For Value Stocks. Michael Sprung will share with you 5 stocks set for long-term gains here>>

We believe that clients gain from our focus on the long-term fundamentals and not chasing short-term trends.

Like to learn more? Please contact us here>>

The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.