BNN Market Call: Fabrice Taylor of the President’s Club on LIX, RD, NMX, KDX and more

POSTED ON December 04, 2015 BY James Fraser
CATEGORY Fabrice Taylor, Presidents club letter, Stories,

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.

Market Outlook

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.

Stocks

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.

Past Picks

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%.

More Stocks

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.

Top Picks

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.

Follow and join the conversation about stocks at CEO Chat, the investment conference in your pocket.

This article is presented for informational purposes and should not be considered investment advice. Consult a licensed broker and do your own due diligence.

James Fraser

Mr. Fraser joined CEO.ca in October 2014. He is passionate about the mining industry. His passion led to co-authoring the e-book "Mining Stocks Investor Guide: A Guide to Investing in Mining Companies." He has a finance background and has completed his Canadian Securities Course (CSC) and Conduct and Practices Handbook (CPH). When Fraser is not "digging" up the latest mining stock, he can be found enjoying a wide variety of sports or travelling the world. More →

Twitter: @miningstocks

james@miningstocksguide.com

James Fraser

Twitter: @miningstocks

james@miningstocksguide.com

Disclaimer:

Readers are advised that the material contained herein is solely for information purposes. Readers are encouraged to conduct their own research and due diligence, and/or obtain professional advice. Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities. The information contained herein is based on sources which the publisher believes to be reliable, but is not guaranteed to be accurate, and does not purport to be a complete statement or summary of the available data. Any opinions expressed are subject to change without notice. The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. They may from time to time have a position in the securities of the companies mentioned herein, and may change their positions without notice. (Any significant positions will be disclosed explicitly. This article is not intended to meet your specific individual investment needs and it is not tailored to your personal financial situation. Nothing contained herein constitutes, is intended, or deemed to be — either implied or otherwise — investment advice. Thomas Humphreys, Pacific Website Company Inc., and other entities in which he has an interest, employees, officers, family, and associates may from time to time have positions in the securities or commodities covered in these publications or web site. We reserve the right to buy and sell such securities or commodities without notice to readers. While the information herein is believed to be accurate and reliable it is not guaranteed or implied to be so. The information herein may not be complete or correct; it is provided in good faith but without any legal responsibility or obligation to provide future updates. Neither Thomas Humphreys, nor anyone else, accepts any responsibility, or assumes any liability, whatsoever, for any direct, indirect or consequential loss arising from the use of the information in these publications or web site.

Forward-Looking Statements: This article may include certain "forward-looking information" within the meaning of Canadian securities legislation. Forward-looking statements include predictions, projections and forecasts and are often, but not always, identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "forecast", "expect", "potential", "project", "target", "schedule", budget" and "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions and includes the negatives thereof. All statements other than statements of historical fact included in this release, including, without limitation, statements regarding the potential of the Company's properties are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements are based on a number of material factors and assumptions. Important factors that could cause actual results to differ materially from Company's expectations include actual exploration results, changes in project parameters as plans continue to be refined, future metal prices, availability of capital and financing on acceptable terms, general economic, market or business conditions, uninsured risks, regulatory changes, delays or inability to receive required approvals, and other exploration or other risks detailed herein and from time to time in the filings made by the Company with securities regulators. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ from those described in forward-looking statements, there may be other factors that cause such actions, events or results to differ materially from those anticipated. There can be no assurance that forward-looking statements will prove to be accurate and accordingly readers are cautioned not to place undue reliance on forward-looking statements which speak only as of the date of this article. The Company disclaims any intention or obligation, except to the extent required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Always do your own due diligence. We seek safe harbor.