Fabrice Taylor of the popular newsletter The President’s Club made an appearance on BNN Market Call today with host Andrew Bell.
Here is my quick summary of the hour-long show.
Fabrice does not see much joy in commodities. Alberta is suffering with low oil prices, high-end homes are now going for 50% on the dollar and it’s going to get worse. A low Canadian dollar helps but the oil industry is still getting killed and a lot of fat still has to be cut in the industry. Fabrice said it’s frustrating that whatever you own in Canada is affected by the oil price. He likes the lithium space as a clean energy play and believes it has a bright future.
Gatekeeper Systems (GSI:TSXV) – Has a system that protects kid on school buses, for example, with surveillance systems. Small and could be an interesting speculative play. Management has found a way to monetize the company already – it receives a portion of all tickets – and there is more to the story.
Jean Couto (PCJ.A:TSX)- Not a stock he knows particularly well. Health care a good space to be in, but be careful of rising government debt levels. Health care companies are making lots of money, governments are ramping up debt and Fabrice says those two worlds will collide at some point.
Lithium X Energy (LIX:TSXV) – Lithium is a very interesting space right now with the rise of batteries for different applications. Lithium X is billionaire mining mogul Frank Giustra’s latest play and just started trading this week. With strong backing, a deep shareholder base and a lithium brine project in Nevada, it has a good chance of being successful. Fabrice owns a few shares.
Alabama Graphite (ALP:TSXV) – Covers and owns a lot of shares in it. Put out a very attractive PEA and the stock traded a lot of volume but didn’t move. PEA was good but people selling reflective of the marketplace we are in now. A graphite play with some froth in the story but some truth to the thesis.
AutoCanada (ACQ:TSX) – Not a buying opportunity on AutoCanada. AutoCanada is based in Edmonton and has a lot of dealerships in Alberta. A weak economy in Alberta could cause the stock to suffer – he thinks it is going lower.
Snipp Interactive (SPN:TSXV) – Is down around 30% since January. Fabrice still likes it and still owns it. A digital play on rebates/coupons. Company continues to grow and is slightly EBITDA positive. Has bought more in the low 40-cent range. Thinks they will eventually be bought out.
Klondex Mines (KDX:TSX) – Up 9% since late January. Company has done very well because they have a spectacular deposit. Does not own it anymore but keeps an eye on it.
Slate Office REIT (SOT.UN) – Down 4% this year. People concerned about interest rates. Management group was bought by another group. Yield is 10% which he thinks is pretty safe. He still owns it and doesn’t think he’ll make much money off it, but will take the 10%.
Petrowest (PRW:TSX) – A construction (gravel) company that has a bunch of heavy machinery they either lease or use themselves. Alberta company that has suffered with the way that economy. Signed a big contract recently so stock popped (British Columbia’s Site C hydroelectric dam). All 9 analysts have a buy on the stock at higher target prices than the current 39-cent level.
Canopy Growth (CGC:TSX) – The merger between Tweed and Bedrocan. The hype here is that Trudeau will legalize marijuana. Fabrice thinks the government will eventually legalize it but it might be a while. Would not buy it at these levels.
TransCanada (TRP:TSX) – TransCanada has very stable cash flows so they can afford a lot of debt. 10-12 years ago stock got crushed on debt concerns, but it turned out to be a great buying opportunity. Despite price of commodity, oil will still have to be transported via pipelines. Pretty stable company (5% yield) not bad but not super attractive.
Apivio Systems (APV:TSXV) – A very interesting little story – they make phones. One is a desktop-based phone. Nice little business, revenues are healthy and growing. He likes the CEO but says they need to improve margins and he thinks they will.
Concordia Healthcare (CXR:TSX) – Was ridiculously over priced at $100-110. Debt load is a scary because they don’t have that steady stream of cash flow. Always acquiring businesses but what happens if they make a misstep? Is cautious on the stock.
Potash (POT:TSX) – Not a company Fabrice knows particularly well. Chart says it all, as it follows all commodity producers lower. Not attractive right now.
Boeing (BA:Z) – Another company he does not follow closely. Thinks U.S. stocks are all fairly expensive right now. Airline traffic is growing so probably not a bad bet. Best in class probably but not for him.
Diversified Royalty (DIV:TSX) – He owns it and covers it. Alberta economy slowing, which will hit the royalty they have on restaurants. Things at the company continue to be OK and it has a nice yield. Watch for another deal soon.
Nuvo Research (NRI:TSX) – Has been involved in this name for about a year and a half and has done well on the stock. Company is splitting itself in two – one will be a spec pharma company and the other will be a pure R&D company. Has about $50 million in cash. Frustrated but owns it and likes it.
Capital Power – (CPX:TSX) – Sell. Coal power in Alberta.
Russel Metals (RUS:TSX) Sell. Steel fabrication shop located in Alberta servicing the oil industry so kind of a no-brainer.
Red Eagle Mining (RD:TSXV) – If you like gold, buy this one. Production next year in Colombia. Trading at about 1X estimated cash flow.
Patient Home Monitoring (PHM:TSXV) – Buy. Looks cheap. Probably taken over in next 12 months.
Nemaska Lithium (NMX:TSXV) – Looking to build a lithium mine in Quebec. Ready to start building the mine. A high-risk story but he thinks has been de-risked a lot. Lithium demand continues to grow. Speculative but could pay off.
Cash – You should always hold some cash. Be ready for opportunities. He is 80% cash right now and is always 20%.
Martinrea (MRE:TSX) – Car parts maker. Read a good research report on this company. Margin expansion and revenue growth. Multiple is only 8X which is cheap and could go to 10-12X.
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This article is presented for informational purposes and should not be considered investment advice. Consult a licensed broker and do your own due diligence.