jeudi 2 janvier 2020

Picks for 2020

My picks for 2019 were:

Alimentation Couche-Tard: up 21%
MTY Food Group:  down 8%
Five Below: up 25%
Alphabet: up 29%
Visa: up 42%
Average performance (excluding exchange rate and dividends): 21,8%

compared to...
S&P/TSX: 18%
S&P: 27%

That's an OK performance. I've seen a lot of people on the Internet that did much better than that. Actually, I did better than with my portfolio, but I'll come back to it later. For now, here's my picks for 2020:

Alimentation Couche-Tard
MTY Food Group
Boyd Group

All of them have an estimated growth of 15% or more for the next year, except for MTY that's got an estimated growth of about 10%. Some people may aim much higher than that with their picks but I prefer to stay with agressive stocks that have high chances to achieve what is estimated and that are not too pricey.  

For 2020, I wish you to be financially independant. To leave your job and to stay in your underwear all day long without being exposed to people you hate. That's what you should aim for when you begin to invest and what you should continue to aim all through the road. 

Please, share your 5 best ideas for 2020 in the comment section. 

13 commentaires:

  1. My picks for 2019

    Picks 2019 Dec-19 % Return

    STN 29.66 37 7.34 24.75
    BAM.A 54.19 75.17 20.98 38.72
    OTEX 44.90 57.65 12.75 28.40
    BYL 3.45 2.28 -1.17 -33.91
    EAF nyse 11.82 11.39 -0.43 -3.64

    AVE RETURN 10.86

    For next year

    Picks 2020 Jan-02

    BPY.UN 23.44
    LGT.B 39.60
    WCP 5.48
    TOU 15.08
    DY nyse 46.90

  2. Sorry if it looked messy but I have the flu and am delirious...

  3. TLDR: I will list 2020 top picks as my projected biggest holdings - HCG, MTY, CSU, ENGH, ATD.B [excluding EQB since in same industry as HCG]


    PENETRATOR: Don't you think BYD is too pricey at this point? It's current TTM PE is more expensive than CSU with much lower ROE. CSU is still 2x as efficient compounder based on accounting numbers. On cash flow, however, BYD is quite interesting... I am split about BYD even though I have been following it for more than 3 years, always thinking it is too expensive... and it always seem to get more expensive. It is kind of like CSU and me being too much of a chicken to make a committment to buy.


    GAVIN: I hope you feel better and will fight off the flu.

    I was also heavily sniffing around LGT.B and BYP.UN (as well as BAM) over the past few weeks.

    The logistec revenue and profit charts on their website are just awesome, but I think its profitability and compounding growth are likely not going to be stellar into the near term future. Did you find out about some catalyst or new line of business (like the watermain repair) they might be entering into that I missed?

    BPY.UN is seriously undervalued and pays very handsome dividend, but it keeps issuing new shares and paying hefty management fees and performance bonuses to the parent company. Even though there is a buyback in place and 30%+ safety buffer on book (not market value!!!), I am not sure if its growth will be better than the parent BAM, in the long term. I am also trying to weed out rather than add extra holdings. BAM should (according to the management projections) have a 5-year CAGR growth of over 19% if I recall correctly. If I fail to purchase my cheapo limit orders [LNR, NFI, SJ set at more than 10% discount to current price] in TFSA, I will put all of this years contribution to BAM [which I hold in TFSA]. I was also considering parking longer term cash reserves into BPY.UN with 1+ year horizon instead of GICs... but I am still thinking about it and am kind of strapped for cash anyways to initiate a more meaningful position.

    Do you think energy will finally make a bounce up this year?

    ============= full response below =============

  4. Dear All,
    I am still working on my portfolio... but the plan for me is to primarily rebalance. I have 10 open orders at the moment as of Wednesday - none of which got filled because I am too cheap and need more than a 10% drop for some of them to fill. I would like to buy into two new holdings this year, one "full" position in ATD and a "partial" position in one tiny venture stock that I will not name yet (market cap sub 25M and thinly traded). I am also a little strapped for cash so I do not have as much powder to play with this year as previous years.

    If I manage to move all of the money around and fill my outstanding orders, then the ***REBALANCED*** portfolio should look something like this:

    14.86% Home Capital Group Inc
    12.93% Equitable Group Inc.
    7.41% MTY Food Group Inc
    7.14% Constellation Software Inc.
    5.48% Enghouse Systems Limited
    4.52% * Alimentation Couche-Tard Inc Class B [open NEW position]
    4.50% * NFI Group Inc [open average-DOWN position]
    4.49% * Linamar Corporation [open average-DOWN position]
    4.38% * ECN Capital Corp [open average-UP position]
    4.37% * Dollarama Inc [open average-DOWN position]
    4.32% * CCL Industries Inc. Class B [open average-UP position]
    4.32% * Lassonde Industries Inc [open average-DOWN position]
    3.75% * ***VENTURE TINY CAP*** [open NEW position]
    3.30% CGI Inc
    2.74% Winpak Ltd.
    2.57% Canadian National Railway
    2.47% * Stella-Jones Inc [open average-DOWN position]
    1.65% Brookfield Asset Management Inc
    1.04% Richelieu Hardware Ltd.
    1.00% Bausch Health Companies Inc
    0.83% Altagas Ltd
    0.70% CES Energy Solutions Corp
    0.92% Computer Modelling Group Ltd.
    0.26% Black Diamond Group Ltd
    0.02% Brookfield Business Partners LP
    0.02% Cipher Pharmaceuticals Inc

    The portfolio should have 5.29% TTM earnings yield and have almost 14% appreciation potential if it were to only return back to its 52 week high multiples without any underlying earnings growth.

    I am also waiting for some price recovery to sell everything below 2%, except for BAM. In the longer term, I am planning to exit positions in the following stocks once the price will rationalize:
    LNR too cyclical
    LAS.A deteriorating metrics
    SJ limited room for growth
    CEU failed to maintain margins
    ALA lost confidence in management
    RCH too expensive for limited growth
    CMG no growth; failed to keep margins
    BHC regulatory uncertainty; too much debt
    BDI failed to maintain margins
    CPH lost confidence in management
    BBU.UN prefer to own parent BAM
    They fail my growth and/or profitability criteria. The emerging hippie climate change and health regulations might permanently impair some of these stocks and their future profitability/growth prospects.

    I will also note that I am keen on accumulating larger positions in the following holdings but ran out of cash/contribution room:
    CSU kindof expensive; uncertain future due to large size
    GIB.A did not make RRSP contribution and waiting to sell BHC and CMG at higher price
    WPK less growth than CCL and no room in TFSA
    CNR not sure if can grow faster than GDP
    BAM.A not enough room in TFSA, low accounting profitability

    I was also considering to purchase BOYD group, but it appears way too expensive compared to ATD and other companies with better accounting numbers and similar business model.

    My current "full" position is about 1/5 of what I would like my portfolio to grow into, in the long term. As a result, I do not plan to reduce positions in HCG and EQB at least until they will reach 50% higher weighing in my current portfolio or become too expensive.

    Good luck everyone and all the best in 2020!

    1. Oh and I forgot to include my performance. I just logged into my brokerage account to see if my orders got filled (so far only CCL). My 5-year annualized investment returns are 3.19% versus 6.18% for the TSX index. I would have done better holding bonds. My cumulative 5-year performance is 15.73% (non-registered 36.56%, TFSA 34.73%, RRSP -49.03%) versus TSX index of 34.38%. So I have managed to get only about 46% of the index's gain... with a lot more risk. I only broke even in late summer this year for the portfolio as a whole. My portfolio 2019 performance was 40.27% vs 22.32% TSX index, but this was a big anomaly as indicated by my poor longitudinal results. Big lessons for me are to be mindful of too much concentration and adjusted earnings - my losses are predominantly due to the healthcare stock collapse which were at one point 2/3 of my RRSP.

  5. I wouldn’t take my annual picks too seriously. The annual picks are basically a contest, its not really investing. A one year timeframe is far too short for my style of investing. That being the case, given the parameters of the contest, I try to take chances in the hope of capturing some alpha over the coming year (small cap selections, investing themes etc…)

    I picked LGT.B for my annual picks simply because it is cheap and has a good management team. It deals in hard assets so its not really a good fit for my RRSP as 60 per cent of my holdings are in the Brookfield family of companies who specialize in that area.

    Having said all that I do own BPY.UN and WCP in my RRSP

  6. SHOP - $405.87
    AVLR - $78.28
    TTD - 269.85
    DXCM - $217.91
    AYX - $105.03

    Picked based on products or themes that I think will do well over the long term. Not too concerned with short term movements or expensive prices. Buy and hold.

  7. My theme is badly beaten down small caps that are still profitable. The first one is pretty much priced for eventual bankruptcy.

    TUP Tupperware Brands $8.25
    CRNT Ceragon Networks $2.10
    RVLV Revolve Group $18.75
    AOBC soon to split into american outdoors brand AND smith & wesson $9.28
    SUPN Supernus Pharma. $23.70

    1. Very interesting! Do you perform any additional due diligence on more beat up companies? How do you value declining businesses? How do you consider leverage and intangible assets in your considerations? Are you hoping for multiple expansion or take-over/out to earn your return? What catalysts do you like to see? Aren't you scared of further price capitulation when dividends will be cut? Would you consider Canadian oil companies (some are trading at 3x cash flow etc)?

  8. I had a 30% return on my portfolio in 2020, and 20% on annual basis since its inception in 2017. I was fortunate to have avoided costly mistakes in 2019 and finally decided to shed 75% of my position in Berkshire Hathaway. BRK was 18% of my portfolio at the same date last year.

    Here is my five pics for 2020. They are among the most import position in my portfolio:

    1. Copart
    2. Boyd Group Services
    3. Constellation Software
    4. Visa
    5. Microsoft

    Regarding Microsoft. This company is doing much better since Satya Nadella is the CEO. Thanks to Cloud computing services also. Earnings per shares have grown by 55% since 2017, ROE is at 40% in the stock is currently trading well under its 5 years average.

    Good luck

    1. 2019 201812ATD +27%, CPRT +98%, DOL +43%, KHC -28% & MA +66% AVG=41%... Moyenne réelle du portefeuille=32,2%...

      Sélection pour 2020:

      See you next year!

  9. I'm late but if this benefits the group

    Sabre SABR
    Checkpoint software CHKP
    Stryker SYK