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Fabrice Taylor, Publisher, the President’s Club Newsletter
FOCUS: North American Equities
Market Outlook:
Big caps are starting to look pricey, but we live in different times, with low interest rates and tame inflation, so the old yardsticks don't necessarily apply as rigorously as they have in the past. You might see some sector rotation in the coming months, as institutions sell one to buy another. That might lead to choppiness, which is great for the retail investor who can keep his wits about him. I don't expect that returns will be as good this year as last for indices, but I don't really care about the index because there are always individual stocks going up even in poor markets. It's my mission to find them.
TOP PICKS:
easyhome (EH TSX)
Most recent purchase was last week at $18.
The company is one of the cheapest growth stories in Canada. It operates two divisions, one leasing furniture and appliances, the other making loans to the credit challenged. The leasing business is nicely profitable but mature. The lending business is growing rapidly. As an added bonus, the bankruptcy of Cash Store, the payday lender, could be great news for Easyhome, as Cash store has about 100 locations in Ontario, which has banned payday loans. Easyhome will be able to acquire store leases in excellent locations, and pick off Cash Store customers, which should accelerate growth.
McCoy Corp. (MCB TSX)
Most recent purchase was two weeks ago at $6.05.
This company makes tools for the oil and gas industry. It has offices in Houston and Lousiana, where it services the offshore drilling industry, which has been strong. McCoy has made excellent inroads selling various tools to the big players in the oil patch, and while this is a competitive business, which is reflective in pricing of original orders, customers have to buy replacement parts from McCoy. Next year we'll see a lot of replacement part orders for some of the new products it introduced in the past couple of years. Furthermore, the stock was crushed when the company announced a botched ERP installation. This happens often with ERP, but it's temporary, and ultimately the system will boost profits. The stock is temporarily cheap, pays a dividend and the company has no debt and lots of cash.
theScore (SCR TSX-V)
Last purchase at $0.30
The Score used to be a sports station but it was bought by Rogers. The company kept the website and app, and the app is growing rapidly. It's number 2 in North America, and particularly big with sports betters. Company has revenue but no net income, but there's still room for growth, as there are lots of sports fans out there who don't use apps. What makes it particularly interesting to me is that the firm did a financing two weeks ago at 30 cents (I participated) and insiders and their family and friends took about $8 or $9 million of $15 million. Apps are popular with investors, and this one is not well known so I think it goes up from here.
Disclosure: |
Personal |
Family |
Portfolio/Fund |
EH
|
Y |
Y |
N |
MCB
|
Y |
Y |
N |
SCR
|
Y |
N |
N |
Past Picks: May 29, 2013
NeuLion (NLN TSX)
I still own Neulion and I believe it's going a lot higher. It popped recently when The Globe and Mail said it could be the next Netflix, which is true, although it won't ever be that big. When a stock like this pops sharply on big volume, I always advise subscribers to take some profit. The stock has settled down and looks ready to rise again, so I think this is a good entry point. It will eventually be sold to a bigger player for a lot more than the current price in my view.
Then: $0.38 |
Now: $0.95 |
+150.00% |
TR: +150.00% |
New Flyer Industries (NFI TSX)
I still own and like New Flier. When this bus maker's margins return to normal levels I think the stock will be quote closer to $20. In the meantime, it grinds higher and pays a dividend. And remember that Brazilian bus maker Marcopolo owns 20% of New Flier. That puts a target on the stock's back.
Then: $10.16 |
Now: $11.25 |
+10.73% |
TR:+15.74% |
Premium Brands Holdings (PBH TSX)
Premium Brands is extremely well run but I moved to a sell in January over concerns about food inflation and valuation. I'm not sure they can pass it on to customers quickly, or that their deft acquisition strategy will compensate. I keep it on my watch list however.
Then: $18.36 |
Now: $21.50 |
+17.10% |
TR: +24.56% |
Total Return Average : +63.43%
Disclosure: |
Personal |
Family |
Portfolio/Fund |
NLN
|
Y |
N |
N |
NFI
|
Y |
Y |
N |
PBH
|
N |
N |
N |
Website: www.presidentsclub.ca
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