Have you read the last ROE reporter? It's been released on thursday and it's excellent, once again.
The january edition is the most interesting of the year because Jason Donville presents his approach: High ROE/low PE ratio stocks, like he does every year. Also, Jason states that even if the TSX is mainly based on natural resources and, to a lesser extent, financials (for a lot of people, investing in Canada means investing in one of the big banks or in Suncor), there's some great stocks out there in the knowledge sector (healthcare and technology) which deserve attention.
As always, at the end of the ROE reporter, there's a list of stocks and Donville presents his 5 top picks for the year ahead.
For 2016, his faith goes to his usual picks:
CGI Group
Home Capital Group
Concordia Healthcare
Constellation Software
CRH Medical
The first four names represent more than 30% of my portfolio. So, I believe in them too, obviously.
This year, I'll try to prove myself by playing the game against Donville (and against all the others analysts I'm talking about from time to time). So, I'm gonna chose 7 stocks that I believe will get good results for the year ahead (5 serious picks and 2 long shots). A substantial part of my portfolio is made of US equities. Would it be fair to chose some US equities against a 100% canadian equities portfolio? I don't know. The canadian dollar is so low that it may not be such an unfair approach. In fact, the canadian dollar should rise sooner or later, which would reduce the performance of all US equities. So, I've decided to chose one US listed company.
I think that Donville chosed pretty good stocks and I'd chose most of them too. But I'll try to be original and chose something else.
Here's my choices for 2016.
1- Canadian Pacific
2- Valeant
3- Knight Therapeutics
4- Couche-Tard
5- Allergan (US listed)
Long shots:
6- Ten Peaks Cofee (TPK.TO)
7- Rifco (RFC.V)
I'm betting on cash full companies such as Knight Therapeutics and CGI Group (even if I didn't chose that last one because Donville chose it first). The market is low and there's plenty of occasions out there, so companies with lots of cash may jump on the occasion to buy something cheap. Cheap companies might as well be bought (Concordia Healthcare, Callidus Capital, Home Capital Group, Nobilis Health, etc).
I'll surely write a review at the end of 2016 or the beginning of 2017.
If you're interested to participate, please use the comment section to write your 5 picks for 2016.
samedi 30 janvier 2016
dimanche 24 janvier 2016
Rifco, now a great bargain?
In the stock market, usually, people are either "growth" or "value". It means that people invest in stocks that are growing year after year or in stocks that are really cheap, like, for instance, under book value.
I've never been a fan of value investing. Usually, when you're a value investor, you seek companies that have had a bad management, have been thrown in a crisis or in big trouble (AIG, Bank of America, Sears). Sometimes, it may be a good thing to invest in these companies but I think that the real opportunities among these companies are scarcier than among growth stocks.
So, if you're a value investor, you'll end up with companies like IBM in your portfolio. It's not a bad pick, because the stock is hated even though the company continues to make money (earnings per share are still growing even if sales are declining). That company may take a long time to recover but at least, it's management is devoted to shareholders.
These days, on the stock market, there's plenty of stocks that are selling under book value. Even some good companies for which sales have slowed down are selling around book value. I've written about Home Capital Group (HCG.TO) before and I've wrote a few words about High Arctic Energy (HWO.TO) lately. They're actually value stocks that could easily transform into growth stocks in a matter of months.
And there's Rifco too (RFC.V). Remember in february 2015, I wrote an article called: "I've had it in the ass with Rifco". I'm pretty happy to have sold all my shares back then because the stock went under 1$ last week. In fact, the stock is selling at around 3 to 5 times this year earnings! It seems pretty crazy to me. More, the ROE of Rifco is around 25. And the company makes money even if sales have declined a lot over the last year.
Yeah, I haven't forgot: Rifco is listed on the Venture, which is an index that I dislike. But, come on, a financial that makes money with a ROE of about 25, selling at around 3 to 5 times earnings? I'm tempted to go back in the stock, with a very low percentage of my portfolio however. Something like 1 or 2%.
Heads, you double your money easily, tails, you lose a small percentage because I don't see how Rifco could go much lower than that.
Which makes me rant once again about CRH Medical and Patient Home Monitoring. These two small caps don't make that much money (in fact, PHM's earnings are negative) while RFC still makes money even if it's not that fun in Alberta these days.
So, to be clear, I'd be pretty much more interested to invest in Rifco than in maybe any other small cap right now.
I've never been a fan of value investing. Usually, when you're a value investor, you seek companies that have had a bad management, have been thrown in a crisis or in big trouble (AIG, Bank of America, Sears). Sometimes, it may be a good thing to invest in these companies but I think that the real opportunities among these companies are scarcier than among growth stocks.
So, if you're a value investor, you'll end up with companies like IBM in your portfolio. It's not a bad pick, because the stock is hated even though the company continues to make money (earnings per share are still growing even if sales are declining). That company may take a long time to recover but at least, it's management is devoted to shareholders.
These days, on the stock market, there's plenty of stocks that are selling under book value. Even some good companies for which sales have slowed down are selling around book value. I've written about Home Capital Group (HCG.TO) before and I've wrote a few words about High Arctic Energy (HWO.TO) lately. They're actually value stocks that could easily transform into growth stocks in a matter of months.
And there's Rifco too (RFC.V). Remember in february 2015, I wrote an article called: "I've had it in the ass with Rifco". I'm pretty happy to have sold all my shares back then because the stock went under 1$ last week. In fact, the stock is selling at around 3 to 5 times this year earnings! It seems pretty crazy to me. More, the ROE of Rifco is around 25. And the company makes money even if sales have declined a lot over the last year.
Yeah, I haven't forgot: Rifco is listed on the Venture, which is an index that I dislike. But, come on, a financial that makes money with a ROE of about 25, selling at around 3 to 5 times earnings? I'm tempted to go back in the stock, with a very low percentage of my portfolio however. Something like 1 or 2%.
Heads, you double your money easily, tails, you lose a small percentage because I don't see how Rifco could go much lower than that.
Which makes me rant once again about CRH Medical and Patient Home Monitoring. These two small caps don't make that much money (in fact, PHM's earnings are negative) while RFC still makes money even if it's not that fun in Alberta these days.
So, to be clear, I'd be pretty much more interested to invest in Rifco than in maybe any other small cap right now.
dimanche 17 janvier 2016
Jason Donville VS Fabrice Taylor VS Christine Poole VS Bruce Campbell (second round)
In october, I wrote some lines about the results of the four analysts listed above over a one year period.
Three months later, in the eye of the storm, let's take a look at which analyst did the best. Take note that the period is slightly different for each analyst because they almost never appear on TV at the same time. However, their appearances have been close enough to compare them.
Once again, I've retained the three top picks for each analyst. An average return is calculated for each list of 3 top picks.
Jason Donville (february 5th, 2015)
Valeant (VRX.TO): DOWN 45%
Constellation Software (CSU.TO): UP 38%
CGI Group (GIB-A.TO): UP 6%
Average return for top picks: 0%
Fabrice Taylor (january 28th, 2015)
Klondex Mines (KDX.TO): UP 2%
State Office (SOT-UN.TO): DOWN 20%
Snip Interactive (SPN.V): DOWN 48%
Average return for top picks: DOWN 22%
Christine Poole (february 10th, 2015)
Royal Bank (RY.TO): DOWN 12%
PPG Industries (PPG): DOWN 20%
Loblaws (L.TO): UP 4%
Average return for top picks: DOWN 9%
Bruce Campbell (january 14th, 2015)
Diversified Royalties (DIV.TO): DOWN 24%
Nobilis Health (NHC.TO): DOWN 16%
Patient Home Monitoring (PHM.V): DOWN 31%
Average return for top picks: DOWN 24%
Can you believe it? Two of these analysts did worse than the stock market with their top picks (Fabrice Taylor and Bruce Campbell). One analyst did almost the same as the stock market (Christine Poole) and Jason Donville is still the king with his 0% total return (beats the index by 11-12%).
I'm not really surprised for the results of Donville, but I'm beginning to think that the others are fucking lame. They're suppose to give advices to people on TV and they fucking can't achieve results better than the index with their biggest conviction picks.
Worse, they fucking achieve results twice as bad as the market.
Three months later, in the eye of the storm, let's take a look at which analyst did the best. Take note that the period is slightly different for each analyst because they almost never appear on TV at the same time. However, their appearances have been close enough to compare them.
Once again, I've retained the three top picks for each analyst. An average return is calculated for each list of 3 top picks.
Jason Donville (february 5th, 2015)
Valeant (VRX.TO): DOWN 45%
Constellation Software (CSU.TO): UP 38%
CGI Group (GIB-A.TO): UP 6%
Average return for top picks: 0%
Fabrice Taylor (january 28th, 2015)
Klondex Mines (KDX.TO): UP 2%
State Office (SOT-UN.TO): DOWN 20%
Snip Interactive (SPN.V): DOWN 48%
Average return for top picks: DOWN 22%
Christine Poole (february 10th, 2015)
Royal Bank (RY.TO): DOWN 12%
PPG Industries (PPG): DOWN 20%
Loblaws (L.TO): UP 4%
Average return for top picks: DOWN 9%
Bruce Campbell (january 14th, 2015)
Diversified Royalties (DIV.TO): DOWN 24%
Nobilis Health (NHC.TO): DOWN 16%
Patient Home Monitoring (PHM.V): DOWN 31%
Average return for top picks: DOWN 24%
Can you believe it? Two of these analysts did worse than the stock market with their top picks (Fabrice Taylor and Bruce Campbell). One analyst did almost the same as the stock market (Christine Poole) and Jason Donville is still the king with his 0% total return (beats the index by 11-12%).
I'm not really surprised for the results of Donville, but I'm beginning to think that the others are fucking lame. They're suppose to give advices to people on TV and they fucking can't achieve results better than the index with their biggest conviction picks.
Worse, they fucking achieve results twice as bad as the market.
vendredi 15 janvier 2016
The clearance rack
Holy fuck, what a beginning of year it is! Almost every investor out there has lost money in the 15 first days of the year. And we'll probably continue losing money, because we're overdue for a such a bad moment.
I've just began to take some yoga lessons. So I approach this crisis with a peaceful mind. Oh yeah, I'm full of mantras, such as "peace, joy, happiness". No shit, they really tell you to repeat that crap in your mind while you're doing some contorsions. No need to tell you that I'm not telling myself that kind of shit at all. Instead, I'm cursing like a lumberjack while they tell me to raise my leg above my head or some other impossible thing to do for a sedentary person.
Well, I'm peaceful but I don't really like this period we're going through. We forgot what a bear market was. Only an handful of stocks keep doing well these days and many of them are those low beta stocks.
What's so great with corrections like these is that almost all stocks are down, and some are a lot. Which means that the bargain price of a lot of companies is linked to a general context instead of a particular problem within companies. So, we can buy without being too worried about a particular problem.
A great truth in life such as in investment is that most things tend to return to their average level. So, when we see an anomaly caused by nothing too important, the return to an average level should happen sooner of later.
For instance, if we take a look at Home Capital Group.
Lowest PE ratio for the last 5 years: 9
Highest PE ratio for the last 5 years: 11,6
Actual PE ratio: 5,3
Shares are trading at book value, which is pretty rare for a company that is making money.
Things may be slowing down at Home Capital, but the actual PE ratio is about 40% lower than the lowest PE ratio of the last 5 years.
Or, take a look at Polaris, one of the best bargains in the US right now, in my opinion.
Lowest PE ratio for the last 5 years: 18
Highest PE ratio for the last 5 years: 27
Actual PE ratio: 11
Like for HCG, the growth is slowing there too, but the actual PE ratio is way way lower than the lowest point of the last 5 years (for a company that still has good sales and a very high ROE)
These days, Warren Buffet has bought for many hundreds of million $ of Phillips 66 (PSX). That stock seems cheap too, like all those stocks related to oil and gas. In the TSX, there's High Arctic Energy (HWO.TO) that may deserve some attention with a price under book value, a ROE of about 15 and a PE ratio of less than 7. As a canadian, I'd probably look there instead of PSX.
Speaking of Buffet, Berkshire's trading at about 130% of book value. Buffet has said before that he would buy back his own stock at 120% of book value. So, it may be a good moment to buy these shares too.
I could continue like that on and on, because, frankly, there's a lot of great stocks that went down a lot.
In fact, I wish I had sold all of my positions 6 months ago to buy many many stocks right now. But, that's the tragedy of being infected by so-called great ideas such as "buy and hold", "don't try to time the market", "you should always be 100% invested in the stock market" and all that shit. You are now in front of a massive clearance rack with about 3 or 4% of your portfolio in cash. Not enough to make purchases that would do the difference on your portfolio.
And David Bowie is dead.
I've just began to take some yoga lessons. So I approach this crisis with a peaceful mind. Oh yeah, I'm full of mantras, such as "peace, joy, happiness". No shit, they really tell you to repeat that crap in your mind while you're doing some contorsions. No need to tell you that I'm not telling myself that kind of shit at all. Instead, I'm cursing like a lumberjack while they tell me to raise my leg above my head or some other impossible thing to do for a sedentary person.
Well, I'm peaceful but I don't really like this period we're going through. We forgot what a bear market was. Only an handful of stocks keep doing well these days and many of them are those low beta stocks.
What's so great with corrections like these is that almost all stocks are down, and some are a lot. Which means that the bargain price of a lot of companies is linked to a general context instead of a particular problem within companies. So, we can buy without being too worried about a particular problem.
A great truth in life such as in investment is that most things tend to return to their average level. So, when we see an anomaly caused by nothing too important, the return to an average level should happen sooner of later.
For instance, if we take a look at Home Capital Group.
Lowest PE ratio for the last 5 years: 9
Highest PE ratio for the last 5 years: 11,6
Actual PE ratio: 5,3
Shares are trading at book value, which is pretty rare for a company that is making money.
Things may be slowing down at Home Capital, but the actual PE ratio is about 40% lower than the lowest PE ratio of the last 5 years.
Or, take a look at Polaris, one of the best bargains in the US right now, in my opinion.
Lowest PE ratio for the last 5 years: 18
Highest PE ratio for the last 5 years: 27
Actual PE ratio: 11
Like for HCG, the growth is slowing there too, but the actual PE ratio is way way lower than the lowest point of the last 5 years (for a company that still has good sales and a very high ROE)
These days, Warren Buffet has bought for many hundreds of million $ of Phillips 66 (PSX). That stock seems cheap too, like all those stocks related to oil and gas. In the TSX, there's High Arctic Energy (HWO.TO) that may deserve some attention with a price under book value, a ROE of about 15 and a PE ratio of less than 7. As a canadian, I'd probably look there instead of PSX.
Speaking of Buffet, Berkshire's trading at about 130% of book value. Buffet has said before that he would buy back his own stock at 120% of book value. So, it may be a good moment to buy these shares too.
I could continue like that on and on, because, frankly, there's a lot of great stocks that went down a lot.
In fact, I wish I had sold all of my positions 6 months ago to buy many many stocks right now. But, that's the tragedy of being infected by so-called great ideas such as "buy and hold", "don't try to time the market", "you should always be 100% invested in the stock market" and all that shit. You are now in front of a massive clearance rack with about 3 or 4% of your portfolio in cash. Not enough to make purchases that would do the difference on your portfolio.
And David Bowie is dead.
mardi 5 janvier 2016
If I was the CEO of a big canadian bank...
If I was the CEO of a big canadian bank, I'd surely buy Home Capital Group (HCG.TO).
At the actual price of about 27$, this stock is selling at less than 6 times next year earnings, which is a total bargain given the fact that this company is making money and has a great track record (even though the last months have been hard: no growth).
At 6 times this year's earnings, you'll get a company that has an historic ROE of almost 25 (however, the ROE should be between 16 and 20 this year).
Some people have been buying AIG and Bank of America because these stocks have been trading under book value. Well, with Home Capital Group, we have a financial stock that is selling almost at book value, with a PE ratio under those of AIG and BAC without any heavy charges comparable to AIG and BAC. HCG has been managed much better than AIG and BAC over the years. As a bonus, you'll get a great dividend of about 3,2% with HCG.
I think there's not a single stock in the TSX with a comparable track record that is selling for such a low price.
So, maybe not any CEO of a big canadian bank will buy HCG. But if they did, it would be a great move in my opinion. They would get financial assets that are performing better than their actual asset and they would pay a ridiculous price.
If they don't buy it, you could do it. I've done it yesterday. And if my position wasn't so high, I'd surely put a lot of money on HCG right now.
I don't see how that stock could go much lower than that.
At the actual price of about 27$, this stock is selling at less than 6 times next year earnings, which is a total bargain given the fact that this company is making money and has a great track record (even though the last months have been hard: no growth).
At 6 times this year's earnings, you'll get a company that has an historic ROE of almost 25 (however, the ROE should be between 16 and 20 this year).
Some people have been buying AIG and Bank of America because these stocks have been trading under book value. Well, with Home Capital Group, we have a financial stock that is selling almost at book value, with a PE ratio under those of AIG and BAC without any heavy charges comparable to AIG and BAC. HCG has been managed much better than AIG and BAC over the years. As a bonus, you'll get a great dividend of about 3,2% with HCG.
I think there's not a single stock in the TSX with a comparable track record that is selling for such a low price.
So, maybe not any CEO of a big canadian bank will buy HCG. But if they did, it would be a great move in my opinion. They would get financial assets that are performing better than their actual asset and they would pay a ridiculous price.
If they don't buy it, you could do it. I've done it yesterday. And if my position wasn't so high, I'd surely put a lot of money on HCG right now.
I don't see how that stock could go much lower than that.
mardi 29 décembre 2015
EDIT: Take a look at me now: Penetrator's portfolio review
Against all odds, the Penetrator's portfolio is up about 4% this year (dividends included). It’s fucking incredible. Until I calculated it,
I thought it would be down about 5%. I think that the conversion rate between US dollar and CAN dollar helped me
a lot (some stocks like Gilead (GILD) had a flat return but the exchange rate dropped by about 12% between the beginning and the end of the year).
The S&P/TSX is down about 11%, so my relative
performance is a positive 15%, which is excellent in my not so humble opinion. Which reminds me a great joke I've read before. Did you know that if you got 3.14 onions, you've got opinions?
Ok, keep going with the stock market and stop these silly jokes you may say. Fuck off I add. I'm always cursing and writing CUNT in capital letters. Couldn't you just appreciate the clean break I'm giving you with this totally harmless joke?
Now, please take a look at that list: Cipher Pharma, Valeant, Rifco, Concordia Healthcare, Home
Capital Group, Nobilis Health, Callidus Capital, Mallinckrodt, Portfolio
Recovery. Just take a look at the shitload of stocks I’ve owned this year which did bad…
It’s a fucking miracle that I’ve achieved to get a 4% yield overall.
My best performing stocks have been Constellation Software,
Alimentation Couche-Tard and CGI group.I haven't got any spectacular performance with any of my stocks, except maybe for Constellation Software.
By the way, during the year, I’ve sold more than 50% of my position in
Constellation Software because I was less and less comfortable with the valuation of the stock. I’m still uncomfortable with it because 30 times next year earnings
seems a lot to me. But it’s a great company. Like Dollarama, Couche-Tard and
Computer Modeling Group, it deserves a high valuation. But, speaking of
Computer Modeling Group, I have the feeling that Constellation Software is
becoming the same : A great company so highly valued that the potential
for an appreciation is greatly reduced. Whatever, with 7,2% of the portfolio,
it’s a reasonable position and I don't plan to sell more in the short term.
Here's my portfolio on december 29th, 2015 :
Canada (58,6%)
Concordia Healthcare : 9,5%
CGI Group : 9,2%
Valeant : 8,5%
Alimentation Couche-Tard : 8,4%
Constellation Software : 7,2%
Home Capital Group : 6,3%
Canadian Pacific : 2,9%
Callidus Capital : 2,4%
Logistec : 2,1%
Nobilis Health : 2,1%
USA (41,3%)
Gilead : 9,9%
Allergan : 7,9%
Ross Stores : 5,9%
Dollar Tree : 5,3%
Apple : 4,6%
Chicago Bridge and Iron : 4,5%
Polaris : 3,3%
dimanche 20 décembre 2015
Performance of 40 stocks from january 1st to december 18th 2015
2015 has been a crappy year. Not crappy in the way that 2008 and 2009 have been, but crappy enough to say that 2015 sucked.
I've written a list of best and worst performing stocks for 2015. I'm amazed at the huge drop of some stocks I've owned this year. Luckily, I've sold most of them before the biggest part of the drop happened. But I've lost a lot of money anyway. So I'm not so joyful about the performance of my portfolio which should be between -5% and 0% this year.
It must have been a difficult year for Donville Kent too because there's a lot of bad performing stocks among Jason Donville's usual picks. Just take a look at Valeant, Patient Home Monitoring, Home Capital Group, Pulse Seismic, Delphi Energy... A true shit storm.
Here's a list of some canadian and american stocks. The performance of each stock is written to show how bad the year has been for many. Take note that the list only refers to stock's price from january 1st to december 18th 2015. So, for instance, Valeant's drop doesn't consider the fact that the stock was 346$ in august 5th then 94$ in november 17th.
Positive yield stocks:
Netflix: 142%
Smith and Wesson: 125%
Amazon: 114%
Constellation Software: 69%
Delta Airlines: 63%
Stella Jones: 60%
Dollarama: 33%
Alimentation Couche-Tard: 28%
CGI Group: 25%
Nobilis Health: 25%
CRH medical: 24%
Allergan: 19%
Ross Stores: 12%
Concordia Healthcare: 10%
Dollar Tree: 8%
Gilead: 8%
TJX: 1%
Negative yield stocks:
Wells Fargo: -2%
Apple: -4%
MTY Food Group: -6%
Badger Daylighting: -7%
IBM: -16%
Exxon: -16%
Carmax: -20%
Valeant: -22%
American Express: -27%
Patient Home Monitoring: -30%
Pulse Seismic: -30%
Portfolio Recovery: -39%
Sears Holdings: -41%
Biosyent: -42%
Home Capital Group: -43%
Polaris: -44%
Michael Kors: -47%
Delphi Energy: -47%
AutoCanada: -50%
Callidus Capital: -53%
Cipher Pharma: -63%
Rifco: -63%
King's College (formerly Loyalist Group): -99%
For those liking the magic formula, we now have the possibility to buy some great high ROE stocks that have low PE ratio (Apple, IBM, Valeant, Polaris, Michael Kors).
P.S. There's someone using my name on stockhouse. It's not me, obviously. I'm not writing anywhere but here.
I've written a list of best and worst performing stocks for 2015. I'm amazed at the huge drop of some stocks I've owned this year. Luckily, I've sold most of them before the biggest part of the drop happened. But I've lost a lot of money anyway. So I'm not so joyful about the performance of my portfolio which should be between -5% and 0% this year.
It must have been a difficult year for Donville Kent too because there's a lot of bad performing stocks among Jason Donville's usual picks. Just take a look at Valeant, Patient Home Monitoring, Home Capital Group, Pulse Seismic, Delphi Energy... A true shit storm.
Here's a list of some canadian and american stocks. The performance of each stock is written to show how bad the year has been for many. Take note that the list only refers to stock's price from january 1st to december 18th 2015. So, for instance, Valeant's drop doesn't consider the fact that the stock was 346$ in august 5th then 94$ in november 17th.
Positive yield stocks:
Netflix: 142%
Smith and Wesson: 125%
Amazon: 114%
Constellation Software: 69%
Delta Airlines: 63%
Stella Jones: 60%
Dollarama: 33%
Alimentation Couche-Tard: 28%
CGI Group: 25%
Nobilis Health: 25%
CRH medical: 24%
Allergan: 19%
Ross Stores: 12%
Concordia Healthcare: 10%
Dollar Tree: 8%
Gilead: 8%
TJX: 1%
Negative yield stocks:
Wells Fargo: -2%
Apple: -4%
MTY Food Group: -6%
Badger Daylighting: -7%
IBM: -16%
Exxon: -16%
Carmax: -20%
Valeant: -22%
American Express: -27%
Patient Home Monitoring: -30%
Pulse Seismic: -30%
Portfolio Recovery: -39%
Sears Holdings: -41%
Biosyent: -42%
Home Capital Group: -43%
Polaris: -44%
Michael Kors: -47%
Delphi Energy: -47%
AutoCanada: -50%
Callidus Capital: -53%
Cipher Pharma: -63%
Rifco: -63%
King's College (formerly Loyalist Group): -99%
For those liking the magic formula, we now have the possibility to buy some great high ROE stocks that have low PE ratio (Apple, IBM, Valeant, Polaris, Michael Kors).
P.S. There's someone using my name on stockhouse. It's not me, obviously. I'm not writing anywhere but here.
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