An important note before we start, due to the holidays there will not be an e-mail next Sunday, December 26th.
Volatility remained high this week and overall, it hasn’t been a good November/December for the markets. Volatility is very likely to continue moving forward, especially as we see restrictions being put back in place in terms of travel, indoor occupancy, and testing.
There isn’t much more to be said that we haven’t already in terms of the conditions of the markets right now. The pendulum when it comes to the high growth market has swung to what we feel is a state of extreme pessimism, and many investors are heading to established, blue-chip companies as the rotation continues.
It is why we can’t reiterate enough how important it is to have a strong core of businesses that make up the bulk of your portfolio. This is exactly why we have the Foundational Stocks here at Stocktrades Premium and have pointed members to them time and time again in situations of high volatility, especially over the course of this year.
Although it seems tempting to run with a higher risk portfolio and simply shift to these holdings when things go south, we’ve witnessed this year how difficult it is to time events like this, which is why Mat and I hold these companies through all market conditions.
And speaking of our Foundational Stocks, we’re keeping a close eye on a pretty significant event. If our Foundational Stocks can make up a 0.66% difference between that and the S&P 500 in the next week and a bit of trading, they will have outperformed every single major North American index in 2021.
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Although we do stress that investing is a long-term commitment, it would be a huge accomplishment for members to have had access to one of the best-performing, diverse sets of stocks on the continent in 2021.
We often get asked when the best time to invest in our Foundational Stocks is. And, the answer every single time is whenever you can. It was easy to ignore these “boring” companies during the market euphoria in 2020 and early 2021, but we are seeing now how critical they are to a well-established portfolio.
This is exactly why we are even more excited to not only bring you a new list of Foundational Stocks in Canada but the United States in early 2022 as well. Another feature to the growing list here at Premium.
Enghouse earnings
The market reacted quite poorly to what we thought was a relatively solid quarter from Bull List stock Enghouse (TSE:ENGH). The company topped earnings expectations by double digits and if we compare 2021 to Fiscal 2019, which would have been the last “normal” operating environment for this company, it posted 20%+ growth in both revenue and earnings.
Yet, the market drove this company below 2019 levels in terms of valuation, as it is clearly getting impatient. Enghouse has proven to be one of the best growth by acquisition companies in the country. And as of right now, it simply cannot execute its strategy due to the fact valuations are at record levels.
The company has stated it refuses to overpay. And as such, growth has slowed a little over the short term as the company hoards cash and waits for the right opportunity. This type of prudent move by management is a positive for anyone who is holding Enghouse for the long term but is likely to cause an investor that can’t see the forest for the trees to sell and seek other opportunities.
We are seeing some of the same negative sentiment with Acuity Ads, which has been criticized for carrying a large cash balance, waiting for the right opportunity instead of spending recklessly.
Mat and I both continue to hold Enghouse, with no intentions to sell. You’ll see our updated report of the company come out this week, so stay tuned.
Nuvei (TSE:NVEI) added to the Watch List
The environment for high valuation growth stocks is not the best right now. But, there are certainly some we are keeping an eye on, one being Nuvei.
We won’t go too in-depth on why we’re adding the company to the Watchlist. We spoke about it extensively last week, which if you missed the e-mail, you can view on the website here.
In the e-mail and post above, we mentioned our avoidance of adding Nuvei to the Bull List at this time simply due to volatility. And, this proved to be true, as the company fell nearly 20% through the first few days of trading last week.
It is very likely volatility will continue. But, we felt it was important to let members know we do have this stock on our radar and are patiently waiting for the markets to calm.
Mat is currently long Nuvei. Feel free to drop any questions on the company on our Q and A or in the Nuvei channel on the Discord.
Report features some may not know about
Since we’ve onboarded quite a few new members in recent months, we thought it would be worthwhile to bring your attention to a perk that may not be well known. Through our corporate membership with Ycharts, we have excellent tools and access to a suite of powerful Ycharts features that members can ultimately benefit from as well.
The first, which is one that many of you currently use inside of the Discord, is to ask for a report on a company. But, we do realize that not all members utilize Discord.
So, the other method of asking for these reports is one that is thus far non-existent in terms of utilization, which is why we are shedding some light on the feature, and that is requesting a report through the Q and A.
Comprehensive Y-Ratings reports are available on all Canadian and US stocks. Simply provide us with the tickers, and we’ll generate the report as requested.
The Y-ratings report is a multipage document that includes very valuable information. It breaks down the company’s Y-Rating and their Pro Value and Fundamental scores. There is a section on Performance, Valuation, Competitors and provides a multi-year, quarter-over-quarter look at the income statement, balance sheet, and cash flow statements.
It is one of the best-structured reports we’ve come across and very simple to understand.
The best part? They are available to all our members – free of charge
All you need to do is drop us the ticker and specify if it is on a Canadian or US exchange and we’ll reply with the appropriate report.
The other great resource we have at our disposal is a powerful screening tool.
We have built four customized screeners based on technical indicators:
– Oversold
Each one of these is available for any stock in Canada and will be reflective of those that meet the screener’s respective criteria. Of note, we built these lists to only include companies with a market cap greater than $100M to strip out any of the microcaps.
If these four screeners sound familiar, they should. We’ve done premium pieces on all four of these technical indicators which included details on what they are and how to use them. We’ve hyperlinked them above so you can go directly to the Premium piece that speaks to them.
Keep in mind, there may be some older information on those pages as they are part of a complete Sunday newsletter. So, disregard most of the talk on the individual stocks inside.
It is worth noting that the Oversold and Overbought screeners are reflective of the companies that are officially in those respective technical territories.
On the flip side, the Golden and Death cross screeners are reflective of those who are nearing those technical events. This means that the event itself hasn’t happened yet but is on the verge of triggering.
There are also two other custom-built reports that members can request:
Once again, they are hyperlinked to the respective Premium content piece, and disregard much of the individual stock information inside of the piece, as it is from previous earnings periods.
Of note, the Graham number is also included in our Key Data Screener. Yet another tool that our subscribers can be actively leveraging.
If you are not aware of what the Key Data screener is, it is a feature at Premium that allows you to search through key profitability ratios like return on equity, assets and invested capital, debt to equity, interest coverage ratios and so much more. You can view it here.
We won’t detail the criteria for any of these in this email, as it is all outlined in their respective premium pieces and also on the key data screener page itself – which we highly suggest you read, more than once.
As a reminder, all our e-mails and Premium content pieces can be found here:
https://www.stocktrades.ca/premium/category/premium-content/
The Stocktrades Premium platform has a wealth of information and at times, it can be daunting for new members coming on board.
Those who have been with us for a while likely have a solid grasp on what is available but even then, a reminder of the powerful tools at their disposal is never a bad thing. They can pick and choose what to utilize and ignore.
Again – how to request these reports or screeners
Simply drop a request in the #report-request channel in Discord (which you can watch this video to learn how to join) or log in and drop it in the Q&A section of the website.
