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>>

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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.

 

TSX Stock Picks & Outlook – Michael Sprung on BNN Market Call Tonight

TSX Stock Picks

Manulife Financial Corp, MFC-T, Owned personally and by clients, Last Purchase March 3, 2016, $18.50

Manulife is a leading Canadian-based financial services group with operations in Asia, Canada and the United States. Over the past five years, the company has made tremendous strides in de-risking the balance sheet and improving profitability through increasing wealth management operations as well as redirecting the mix of products sold. Manulife's geographic diversification in an era of expected interest rate increases, positions the company to do well and raises the prospect of future dividend increases. The stock currently yields around 3.0%.

TSX Stock Picks Outlook - Michael Sprung on BNN Market Call Tonight

TSX Stock Picks & Outlook – Michael Sprung on BNN Market Call Tonight

AGT Food and Ingredients Inc., AGT-T, Owned personally and by clients, Last Purchase December 18, 2014, $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 demonstrative of the growing global demand for pulses. In 2017, AGT will be in a position to expand its ingredients and food shipments as additional capacity comes on-stream and the recently expanded pasta business in Turkey develops. 

Fortis Inc., FTS-T, Owned by clients, Last Purchase April 12, 2016, $39.41

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. Fortis has a history of dividend increases that are expected to continue. The stock currently yields 3.9%.

Outlook:

2016 was a year full of surprises. Following a terrible start in early January to mid-February, markets recovered. Several major events failed to go the way of "expert" prediction; most notably the vote in the UK to leave the European Union (Brexit) and the election of Donald Trump as the 45th President of the United States of America. In both of these occasions, initially markets reacted as the experts predicted but then they changed course and rallied in very short order.While all of this was happening, the European migrant crisis persisted, spurring more radical political movements. The underlying financial problems within the European Union linger, inflaming the rhetoric of politicians competing for headlines. A disturbing trend from investors' point of view is the rising sentiment against free-trade and globilization.

There is no shortage of other global geopolitical concerns in the Middle East (particularly Syria), the South China Sea, Russian interventions in the Ukraine and Syria, etc. 

As we start 2017, we will carry all of this baggage forward. Already, new shocks have emanated from the first weeks of the Trump presidency and many more, yet unknown surprises are sure to follow. The US economy continues to expand and interest rate increases are anticipated as a result. Technology continues to influence productivity and labour markets. 

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. 

You can view the complete interview here>>

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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.  

Top Stock Picks – Michael Sprung on BNN Market Call Tonight

Top Stock Picks

Manulife Financial Corporation, MFC-T, Owned personally and by clients

Manulife is a leading Canadian-based financial services group with operations in Asia, Canada and the United States. Over the past five years, the company has made tremendous strides in de-risking the balance sheet and improving profitability through increasing wealth management operations as well as redirecting the mix of products sold. Recent quarter results disappointed as negative policyholder experience in the firm’s US Long Term Care(LTC) Business overshadowed positive developments elsewhere. Excluding the LTC hit, results from the US divisione were inline with expectations. Canada and Asia reported favourable trends in earnings. The market reacted negatively to these results. MFC has the strongest capital base of the insurers. Going forward, we expect the problems within LTC will be dealt with and at current levels, the shares represent good value and yield 4.2%

Top Stock Picks Michael SprungManulife, MFC, Suncor, SU, HudBay, HBM

Top Stock Picks from Michael Sprung: Manulife, MFC, Suncor, SU, HudBay, HBM

Suncor Energy, SU-T, Owned by clients

Suncor is Canada’s largest integrated oil and gas company. Suncor has a strong production base with quality long-term assets, a strong balance sheet, and an integrated business model smoothing to some extent the cash flow from the various business segments. The latest quarter exhibited mixed results, partially as a result of the wildfires in Northern Alberta that affected both production and operating expenses. We anticipate that production will increase both organically and perhaps through acquisition. Suncor has a strong balance sheet to support and expand operations. At current levels, the stock yields 3.2%.

HudBay Minerals, HBM-T, Owned personally and by clients

HudBay Minerals is one of Canada’s leading producers of zinc, copper and precious metals with operations in Canada, Peru and the US. While the share price has appreciated significantly in the past few months, positive developments are still on the horizon that will enhance the underlying value of the company. Delayed shipments impaired sales in the latest quarter that should be made up going forward. Liquidity has been improved as the large Constancia mine is now commissioned and additional credit facilities have been of this site is possible obtained. Mill throughput in Constancia was constrained by liner wear in the mill that has now been repaired. Further development in Peru is a possibility. Improvements in Manitoba at Lalor and Reed are also noted.

Outlook:

North American markets have continued their upward trajectory despite a growing list of negative geopolitical and business risks, particularly those stemming from the surprising vote in the UK to “Brexit“. At the same time, the global bond markets appear to be signalling an expected decline in economic activity. Governments out side of North America continue to attempt to stimulate economies through quantitative easing and proposed infrastructure spending. Over US$13 Trillion of sovereign debt is now at negative interest rates and the total continues to grow.

Politicians in North America and Europe are exploiting the public’s unrest through fear-mongering on the issues of globalization and free trade as was most evident in the Brexit vote and continues in the US presidential race. As the US election draws nearer, more noise from the political pundits will distract attention from the longer term fundamentals.

After a number of years of expansion fueled by debt, we could be entering a period of deleveraging that will stall global economic growth for a period and potentially cause markets to decline and volatility to increase. Investors should concentrate on the longer term issues and be prepared to take advantage of current circumstances to invest in well financed, well managed companies.

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.

 

Manulife Financial second-quarter net income “lower than expected”

Manulife Financial Corp.(TSE:MFC, Mkt cap 45.32B, P/E 14.99, Div/yield 0.17/2.96, EPS 1.53, Shares 1.97B) has seen its second-quarter net income decline by some 36%, but the reported earnings were in line with analysts’ expectations, who had accounted for the impact of rising interest rates.

Stockwatch Manulife Financial second quarter net income lower than expected

Stockwatch – Manulife Financial second-quarter net income “lower than expected”

As the Financial Post reports, Canada’s largest insurer announced that net income for the second three months of the year came in at $600 million, or 29 cents a share. Profit excluding some items was 44 cents a share, as the 13 analysts surveyed by Bloomberg had predicted.

In a statement, the firm’s chief executive officer Donald Guloien highlighted its progress in wealth management and life insurance but acknowledged that changes in interest rates caused net income to dip to lower than anticipated.

An obvious explanation for the decline comes in the shape of a $362 million hit the firm had to absorb when its accounting assumptions were negatively impacted by a steepening yield curve, primarily in the U.S.

Chief financial officer Steve Roder added that the firm has not been helped by the fact that the value of instruments in Manulife’s interest-rate swap program is dependent on interest rates.

As the FP explains, higher interest rates typically benefit insurers as time goes on, since they drive up bond returns and the assets used against policy guarantees, whereas lower rates see those returns contract.

When the impact of interest rates is taken out, core earnings increased to $902 million, according to financial documents.

“Our strong core earnings demonstrate our continued execution on the key drivers of earnings growth: increasing scale in our wealth and asset management businesses, generating strong insurance growth in Asia, and delivering on our Efficiency & Effectiveness initiative,” Roder said.

Manulife Financial Corporation is a Canadian life insurance company. It is the holding company of The Manufacturers Life Insurance Company (MLI) and John Hancock Reassurance Company Ltd. (JHRECO). Manulife is a financial services company with principal operations in Asia, Canada and the United States.

Manulife Financial’s divisions include:

  • Protection (Asia, Canadian and U.S. Divisions);
  • Wealth Management (Asia, Canadian and U.S. Divisions);
  • Corporate and Other segment.

The Company provides financial protection and wealth management products and services to personal and business clients. It also offers asset management services to institutional customers. The Company operates as Manulife in Canada and Asia and primarily as John Hancock in the United States.

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 the success of a particular investment is always relative to the price you paid. 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.

 

Manulife Financial Bank seeks growth with 830 new ATMs

Manulife Financial Corp.‘s (TSE:MFC, Mkt cap 45.92B,P/E 13.47, Div/yield 0.17/2.92, EPS 1.73, Shares 1.97B) banking subsidiary has announced it will install around 830 new automated teller machines in convenience stores across Canada as it strives to take a bigger share of the country’s retail banking market.

Stockwatch Manulife Financial Bank growth 830 new ATMs

Stockwatch – Manulife Financial Bank seeks growth with 830 new ATMs

As the Wall Street Journal reports, Manulife Bank of Canada has already begun installing the machines, which will be added to a Canadian ATM network called the Exchange Network.

The Exchange Network, which supplies machines to a host of banks and credit unions across Canada, comprises only 11 Manulife-specific automatic banking machines (ABMs) at present.

However, the move by Manulife Bank to bolster its physical presence will see the Toronto-based firm take a more impressive proportion of the Exchange Network, which allows customers of its member bank and credit unions to make surcharge-free withdrawals, deposits or PIN changes.

“This is all about offering convenient banking near where our customers live and work,” said Rick Lunny, president and chief executive of Manulife Bank.

Customers will soon see Manulife machines in Mac’s, Couche-Tard and Circle K convenience stores in Newfoundland, New Brunswick, Quebec, Ontario, Manitoba, Saskatchewan, Alberta, British Columbia and the Northwest Territories.

The installation process is expected to be completed by September, a Manulife spokeswoman said.

Andrew Obee, president & CEO of FICANEX Services, which runs the Exchange Network, said he was “thrilled” with the addition of Manulife Bank’s ABMs to the network, adding that they will bring its total number of machines to more than 3,300.

Interac continues to be the dominant network in Canada, however, with some 65,000 machines having been installed across the country.

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.