Michael Sprung’s Top Picks – BNN Bloomberg Market Call, June 17, 2019

MARKET OUTLOOK

Global economic growth will continue to deteriorate over the remainder of 2019 as trade conflicts are having an effect on fundamental economic events. Evidence of the impact of the disruption caused by these trade concerns can be seen in the bond market where rates are reflecting higher expectations of a slowdown and in the increasing volatility in the equity markets. The diminished pace of global expansion is also evident in stagnant manufacturing output and slower trends in service delivery.

Michael Sprung Top Picks BNN Bloomberg Market Call

Michael Sprung’s Top Picks – BNN Bloomberg Market Call, June 17, 2019

In the U.S., the first quarter exhibited some respite from the market fallout of the fourth quarter of 2018. However, this was largely the result of inventory accumulation that overshadowed the slowdown in business investment and capital expenditures. Europe also continues to struggle with a weakening outlook for exports and capital investment as trade issues cloud the horizon for improvement and manufacturing is depressed. Brexit continues to confound the outlook for the U.K. as trade and business investment is concerned.

Overall, the advanced economies are getting by as labour markets are tight, inflation has been moderate and monetary policies have been very accommodative. With prospect of slower economic growth, central banks are likely to continue to restrain rates but there are limits to how long this can last in the face of ever increasing debt loads.

In this environment, investors are advised to be very cautious but remain cognizant to opportunities that will strengthen portfolio profiles.

TOP PICKS

SUN LIFE FINANCIAL, TSE: SLF

Last purchased in February 2016 at $37.20.

Sun Life Financial operates in Canada, the U.S., U.K. and Asia. SLF has a very strong balance sheet with industry leading excess capital of some $3 to $3.5 billion. We anticipate reasonable growth in earnings over the next few years that should result in expanding dividends. The stock currently yields 4.0 per cent and represents good defensive value in the current environment.

GEORGE WESTON LIMITED, TSE: WN

Last purchased in January 2015 at $96.88.

Weston’s operates fresh and frozen bakery operations in the U.S. and Canada and food distribution through Loblaws, Canada’s leading food retailer. Volumes in the bakery business have been depressed as management goes through the process of rationalizing product offerings to be more in line with consumer trends and optimizing production processes. Going forward, we anticipate that margins in the bakery business will improve as a result of these efforts. Weston’s ownership of Loblaws has been creeping up to the 50 per cent level as share buybacks in the market have reduced the float. Weston has a strong balance sheet. The current dividend yield is 2.1 per cent.

ENBRIDGE, TSE: ENB

Last purchased in June 2019 at $45.39.

Enbridge is a leading energy generation, distribution and transportation company in the U.S. and Canada. Its pipeline network includes the Canadian Mainline system, regional oil sands pipelines and natural gas pipelines. The company also owns and operates a regulated natural gas utility and Canada’s largest natural gas distribution company. Additionally, Enbridge generates renewable and alternative energy with 2,000 megawatts of capacity. Export pipe capacity is tight and ENB has the ability to supply some incremental relief through Mainline at modest capital cost. The company’s stepped up asset monetization program has reduced leverage ahead of schedule. ENB has a highly contracted cash flow profile, financial flexibility and a secured $22-billion growth program. At current prices, the stock yields 6.5 per cent. The stock has been under pressure due to recent challenges with respect to capacity expansions in the US providing a good entry point.

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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 Bloomberg Market Call – Michael Sprung’s Top Picks and Outlook

Outlook:

market call, michael sprung, top picks

MARKET CALL: Michael Sprung’s Top Picks: May 30, 2018

Since the end of the first quarter, North American markets have trended up as the US economy has continued to exhibit positive momentum and the Canadian market has reflected strength in commodities, particularly energy related commodities until most recently. Volatility in the markets has been the result of continuing concerns regarding inflationary pressures and the potential negative impact that rising interest rates could have on the outlook for sustained economic expansion. Geopolitical tensions have also had an effect on investor confidence. Internationally, the discourse between the US and North Korea has been unsettling as well as some political chaos in Europe. From Canada’s perspective, the unsettled trade negotiations surrounding NAFTA combined with the dysfunctional political environment with respect to the Trans Mountain Pipeline are eroding investor confidence.

We have been of the opinion that valuations have been stretched following ten years of market advances. In this environment, 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:

Sun Life Financial Inc., SLF-T, Owned personally and by clients, Last Purchase February 2016 at $37.20
Sun Life Financial operates in Canada, the US, UK and Asia. Insurance companies will benefit from a rising interest rate environment. SLF has a very strong balance sheet with industry leading excess capital. We anticipate reasonable growth in earnings over the next few years that should result in expanding dividends. The stock currently yields 3.5% and represents good value in the current environment.

Precision Drilling Corp., PD-T, Owned by clients, Last Purchase September 2015 at $5.00
Precision Drilling is Canada’s leading contract drilling company. Over the last few years, PD has upgraded their rigs and offers leading technology with a push into analytical platforms offering greater efficiencies. Pricing in the US has improved. Management is very focused on capital discipline and debt repayment is a prioritsuy.

Hudbay Minerals Inc., HBM-T, Owned personally and by clients, Last purchase September 8, 2017, $9.41
Hudbay’s flagship copper mine Constancia is performing well and expectations are Pampacancha will start contributing in 2019. Growth in the next few years will stem from expanded copper, zinc and precious metal production. Recent updates at Lalor indicate greater gold production possibilities by Q3 2018. Rosemont permitting continues with construction anticipated 2019 to 2021. At current levels, HBM is selling at an attractive discount to its peers.

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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 Picks & Outlook – Michael Sprung on BNN’s Market Call Tonight

Outlook:

Global stock markets generally continued their upward bias in  the third quarter of 2017. This bias was supported by strengthening economic growth in both the developed and emerging economies although at subpar levels compared with traditional recoveries. As central banks have cautiously raised interest rates, bond prices have come under pressure. Wage demands in the developed countries have not accelerated as inflationary expectations have remained low and productivity improvements have been driven by technology. In this environment, central banks may temper their enthusiasm to normalize interest rates and reduce their bloated balance sheets.

Michael Sprung Top Picks Sun Life Financial, SLF, Suncor, SU, Aecon Group, AR

Michael Sprung’s Top Picks: Sun Life Financial, SLF, Suncor, SU, Aecon Group, ARE

Against this backdrop, stock markets have continued to advance. The S&P 500 in the US has hit new highs surpassing levels from before the financial crisis. Valuations have also hit high levels making the search for new investment ideas challenging.

A number of factors could come into play that would precipitate a more meaningful market correction than we have seen in the last ten years. In Canada, concerns are centered around the NAFTA negotiations. Since the Brexit vote and the start of the Trump presidency, a backlash against global free trade has been evident, causing uncertainty in the business community, thus dampening the appetite for capital investment. Other geopolitical factors are also of concern. North Korea’s nuclear threat and heightened discord with the US has been very prominent in the headlines as have tensions in the Middle East, Venezuela, Spain, Russia and the Ukraine. Monetary concerns in Greece,Italy, Spain and Portugal have not gone away.

All of these factors lead us to exercise caution and prudence in our investment stance. Investors have to look hard to find well financed, well managed and reasonably priced companies.

Top Picks:

Sun Life Financial Inc., SLF-T, Owned personally and by clients, Last Purchase February 2016 at $37.20

Sun Life Financial operates in Canada, the US, UK and Asia. Insurance companies will benefit from a rising interest rate environment. We anticipate reasonable growth in earnings over the next few years that should result in expanding dividends. The stock currently yields 3.5% and represents good value in the current environment.

Suncor, SU-T, Owned by clients, Last Purchase March 2016 at $32.94

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 that smooths to some extent the cash flow from the various business segments. Management has been focused on increasing efficiencies and positioning the company for future growth. Over the remainder of the year, Fort Hills and Hebron will be coming online. Suncor has a strong balance sheet to support and expand operations. At current levels, the stock yields 3.1%.

Aecon Group Inc., ARE-T, Owned by clients, Last Purchase March 2016 at $16.00

Founded in 1910, Aecon Group is one of Canada’s largest construction companies.   Aecon’s backlog in other infrastructure, transportation and nuclear projects has been growing. The more sophisticated projects should result in higher profitability. The environment for increased public spending in Canada is robust. The company has announced that is considering a possible sale that caused an initial bounce in the share price. Since then, the price has receded somewhat giving a current yield of 3.0%. If a sale occurs, we anticipate that it would happen at higher prices.

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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.

 

Sun Life shrugs off volatile equity markets to post higher-than-expected Q1 profit

Sun Life Financial Inc.’s (TSE:SLF, Mkt cap 27.16B, P/E 12.30, Div/yield 0.39/3.57, EPS 3.55, Shares 612.58M) first-quarter results showed no signs of the choppy equity markets and low interest rates that were present during the three-month period, with profit beating analyst expectations, the Wall Street Journal reports.

Sun Life post higher-than-expected Q1 profit

Sun Life shrugs off volatile equity markets to post higher-than-expected Q1 profit

Canada’s third-largest insurance company by assets saw its net income increase 22% to $540 million or 88 Canadian cents per share in the January-to-March quarter. This time last year, Sun Life posted a figure of $441 million, or 72 Canadian cents per share.

If you factor out the impact of interest rates and equity markets, its underlying net income stood at $582 million, or 95 Canadian cents per share, compared to $516 million, or 84 Canadian cents a year earlier.

Analysts polled by Thomson Reuters were expecting a first-quarter profit of 90 Canadian cents a share, rather than the 95 Canadian cents a share posted.

“In a quarter characterized by volatile equity markets and low interest rates, we delivered earnings growth across all of our four pillars, generated a return on equity within our targeted range and announced a 4% increase in our common share dividend,” Chief Executive Dean Connor said.

Off the back of the earnings release, Sun Life hiked its quarterly dividend by 1.5 Canadian cents to 40.5 Canadian cents per share.

Sun Life’s minimum continuing capital and surplus requirements ratio, which illustrates whether the company has adequate capital to meet obligations to its policyholders, stood at 216% at the end of the first quarter.

While the figures for the first quarter point to a company moving in the right direction, it isn’t doing so with quite as much steam as Manulife Financial Corp. which posted a first-quarter profit that rose 45% from a year ago to $1.05 billion.

Sun Life Financial Inc. is a Toronto based financial services organization. Sun Life provides a range of protection and wealth products and services to individuals and corporate customers. The Company operates in five segments: Sun Life Financial Canada (SLF Canada), Sun Life Financial United States (SLF U.S.), MFS Investment Management (MFS), Sun Life Financial Asia (SLF Asia) and Corporate. The Company distributes its products through a variety of distribution channels, including direct sales agents, managing general agents, independent general agents, financial intermediaries, broker-dealers, banks, pension and benefits consultants and other third-party marketing organizations. The Company operates in Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China, Australia, Singapore, Vietnam, Malaysia and Bermuda. More from Reuters »

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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.

 

Sun Life Financial to assume full control of Indonesian venture

Sun Life Financial Inc (TSE:SLF, Mkt cap 25.27B, P/E 11.64, Div/yield 0.39/3.77, EPS 3.55, Shares 612.41M) has announced it will be buying out a long-time partner to acquire full control of their joint venture in Indonesia.

Sun Life full control Indonesian venture

Sun Life Financial to assume full control of Indonesian venture

In an official statement, the Canadian life insurance company said that once it has secured the remaining 51% stake in PT CIMB Sun Life from CIMB Group, it intends to integrate CIMB Sun Life with its separate Indonesian subsidiary.

In addition, Sun Life Financial Indonesia is extending a deal with PT Bank CIMB Niaga, Indonesia’s fifth largest bank by asset size which is part of the CIMB group.

Kuala Lumpur-based CIMB is one of the world’s largest Islamic banks and one of the largest in the ASEAN countries.

The agreement with CIMB Niaga will give Sun Life the ability to market its products through the bank’s 618 branches, strengthening its customer base throughout Indonesia, the company said.

“This is an exciting opportunity to deepen and enhance our business in Indonesia, a priority market for our long-term growth in Asia,” said Kevin Strain, President, Sun Life Financial Asia.

“We had anticipated and positioned ourselves well to meet the ‘single presence’ policy, and uniting the businesses in SLF Indonesia will give us even greater ability to serve our customers. This includes more efficient investment in technology, products and brand.”

Sun Life, one of Canada’s largest life insurance and wealth management companies, hopes the changes will build further on Sun Life Financial’s momentum in Indonesia, increasing its presence across the country.

The transaction is expected to close by the end of the third quarter of 2016, subject to regulatory approvals.

Sun Life Financial Inc. (Sun Life Financial) is a Toronto based financial services organization. Sun Life provides a range of protection and wealth products and services to individuals and corporate customers. The Company operates in five segments: Sun Life Financial Canada (SLF Canada), Sun Life Financial United States (SLF U.S.), MFS Investment Management (MFS), Sun Life Financial Asia (SLF Asia) and Corporate. The Company distributes its products through a variety of distribution channels, including direct sales agents, managing general agents, independent general agents, financial intermediaries, broker-dealers, banks, pension and benefits consultants and other third-party marketing organizations. The Company operates in Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China, Australia, Singapore, Vietnam, Malaysia and Bermuda. More from Reuters »

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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.

 

Sun Life wraps up purchase of Assurant’s employee-benefits business

Sun Life Financial Inc (TSE:SLF)  says its acquisition of the employee-benefits business of Assurant Inc. means it’s now in a position to offer “one of the broadest arrays of employee benefits to U.S. employers of all sizes”.
Sun Life boosts US presence Assurant acquisition

Sun Life boosts U.S. presence with Assurant acquisition

The Toronto-based company, which announced the completion of the purchase on Tuesday (1 March), revealed it has received an “enthusiastic response across the board about the value our combined business will deliver.”

“Today is an important milestone for us, and we welcome a talented group of employees and valued customers and partners to the Sun Life family,” said Dan Fishbein, MD, President, Sun Life Financial U.S in a statement.

The acquired business adds new capabilities and scale and makes Sun Life Financial U.S. the sixth-largest group benefits business in the U.S.

“This acquisition shows our commitment to being a leader in the U.S. group benefits business, adding greater breadth, capabilities and talent in one of our strategic pillars for growth,” added Dean Connor, President and Chief Executive Officer, Sun Life Financial.

The transaction, valued at $975 million, includes the purchase of a dental business and provider network, a group life and disability business, strong products and capabilities in voluntary benefits and vision, and integrated capabilities in benefits communications, deductions reporting and administration.

The financial services organization said it was working with Assurant to bring the businesses under the Sun Life brand over the coming months, with the two “committed to a smooth transition process.”

Also included in the transaction is Disability RMS, which operates by partnering with other insurers to offer disability products. Disability RMS will continue to operate as a dedicated business unit.

Sun Life Financial Inc. (Sun Life Financial) is a financial services organization, which provides a range of protection and wealth products and services to individuals and corporate customers. The Company operates in five segments: Sun Life Financial Canada (SLF Canada), Sun Life Financial United States (SLF U.S.), MFS Investment Management (MFS), Sun Life Financial Asia (SLF Asia) and Corporate. The Company distributes its products through a variety of distribution channels, including direct sales agents, managing general agents, independent general agents, financial intermediaries, broker-dealers, banks, pension and benefits consultants and other third-party marketing organizations. The Company operates in Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China, Australia, Singapore, Vietnam, Malaysia and Bermuda. More from Reuters »

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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.

 

Sun Life boosts U.S. presence with Assurant acquisition

Sun Life Financial Inc. (TSE:SLF, Mkt cap 26.08B, P/E 12.51, Div/yield 0.38/3.56, EPS 3.41, Shares 610.60M) says its US$975 million acquisition of employee benefits business of Assurant Inc. will widen the scope of its benefits business in North America, the Financial Post (FP) reports.

The purchase of the New York-based specialty insurance operator will see Sun Life double its U.S. group benefits business, with Assurant bringing more than 30,000 customers and 1,700 employees.

Sun Life boosts US presence Assurant acquisition

Sun Life boosts U.S. presence with Assurant acquisition

The FP suggests the amalgamation will make for the sixth-largest group benefits business in the United States, with in-force business in the region of US$4 billion.

“The acquisition of the Assurant Employee Benefits business is directly on strategy, accelerating the growth of our U.S. Group Benefits business and expanding the scope of our benefits business in North America,” said Dean Connor, Sun Life’s chief executive.

Toronto-based life insurance and wealth management firm Sun Life will boast nearly 4,000 employees in its U.S. group benefits business following the transaction, which will see dental and vision products added to its portfolio.

Excluding transaction and integration costs, the acquisition is expected to be immediately accretive, adding eight cents per share to earnings on an annualized basis in 2016, and 17 cents in 2017.

The acquisition is expected to wrap up by the end of the first quarter next year.

Dan Fishbein, president of Sun Life Financial U.S., added that the deal will allow it to offer one of the most extensive arrays of employee benefits products in the market to its customers.

Meanwhile, increasing ranks will help the firm support future investments as it continues to bolster its U.S. business, Fishbein explained.

Sun Life Financial Inc. is a Waterloo, Ontario based financial services organization. The company provides a range of protection and wealth products and services to individuals and corporate customers. Sun Life operates across 5 segments: Sun Life Financial Canada (SLF Canada), Sun Life Financial United States (SLF U.S.), MFS Investment Management (MFS), Sun Life Financial Asia (SLF Asia) and Corporate.

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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 Stock Picks

Market Outlook & Top Stock Picks

Michael Sprung‘s market outlook: The third quarter of 2012 has been characterized by rising stock markets despite slowing and/or deteriorating economies globally. Commodity prices have generally advanced underpinning some of the positive movement in the Canadian market. Be prepared for some negative volatility going forward. Concentrate on financially strong companies that can endure. Have reserves ready to buy shares in these companies during setbacks.

Sunlife (SLF-T): Owned personally and by clients; last purchase June 18 2012 $21.63 Under the direction of Dean Conner, CEO, Sunlife has been at work de-risking the US variable annuity business, putting resources towards MFS, selling off UK exposure and exiting many unprofitable business lines. A more benign interest rate and equity market environment will result in higher levels of profitability in the future. At current prices, the stock is attractive.

Encana (ECA-T): Owned by clients, Last Purchase September 22, 2011 $20.61
Encana is one of North America’s largest natural gas producers with an enviable stable of assets extending from British Columbia to Texas and Louisiana participating in many of the key sectors including the Barnett Shale, Montney, Horn River, Piceance and Haynesville. Weak natural gas prices have negatively impacted the share price. Rising demand over the next few years should be reflected in future valuation. The dividend yield is close to 3.6%.

George Weston (WN-T): Owned by clients, last purchase March 29 2012 $62.25
Expense reduction and productivity enhancements have offset challenges to top line growth in recent quarters. Going forward, WN has about $2 billion in cash with which to exploit opportunities and invest in product improvements. The bakery business is well managed and efficiently run. WN’s share price should also reflect upside from Loblaws as operational efficiency improves from recent capital expenditures.