Surprisingly, the Genx Moderate portfolio has been our best performing here at Stocktrades. Primarily due to stocks like Brookfield Asset Management (BAM.A) and Alimentation Couche Tard providing way better than expected returns. Whenever you can get 20+ percent returns out of blue-chip stocks like that, you’re going to do well.
This portfolio has a heavy allocation towards the financial and tech sectors, making up nearly half of the portfolio between the two. I’m not worried as much about the allocation to the finance sector as I am the tech sector and am a little uneasy with Shopify making up 20.50% percent of this portfolio at the time of writing. So, there will be some changes.
**Daniel Kent is long T.TO
Telus is a mainstay in a lot of Canadian investment portfolios, and for good reason. The company is excellent at continually growing its wireless network and increasing their dividend. The company has posted revenue higher than analyst estimates for the last 5 quarters, and earnings have either hit the mark or exceeded in 3 straight.
Telus pays an exceptional dividend. One of the best in the country in my opinion. With a yield of 4.41% and a payout ratio of 78%, they should have a place in every low risk portfolio.
Canada Goose (GOOS.TO)
**Daniel Kent is long GOOS.TO
Canada Goose has somewhat stalled since a very successful IPO in 2017. Since hittng highs of over $90 in late 2018, it seems there may have been a little too much growth priced into this stock.
The company hit earnings projections and then some on their last quarterly report, yet the stock has fallen over 10% since. As such, we sit here with a below average 5.51% gain in the company since October inception. However, we aren’t even close to giving up on this stock yet.
The company has beat on both top and bottom lines every quarter since its IPO. In my eyes, this is a stock you regret giving up on when you see a sideways stock price. Be patient with this one, and let the company do what it does best, perform.
Canadian Tire (CTC.A)
**Daniel Kent and Mathieu Litalien are long CTC.A
Canadian Tire has posted a couple strong quarters in a row, beating earnings in both quarters (one by 22%) and coming largely inline with revenues (only a 2% miss last quarter.)
The company is facing an online revolution head on and is actually succeeding. Through strong branding and key innovations, Canadian tire has shown that they can still they people into its stores. The stock has struggled return wise only bringing around 2.5% to the portfolio, but I view this stock as significantly undervalued right now. So much so that I actually ended up taking a position in the company a few weeks ago.
As long as Canadian tire continues to drive organic growth and get people into its stores, we will be a holder in this portfolio.
Alimentation Couche Tard(ATD.B.TO) :
Back when I constructed the portfolios in October, I viewed ATD.B as a stock that was significantly undervalued. As such, the portfolio has been rewarded with a 28.08% increase in price.
The company has managed to beat both earnings and sales projections 3 of the last 4 quarters, and this recent slip up in January where they missed revenue by 4.45% and earnings by 7% doesn’t have me worried too much.
With a 5-year annual expected growth rate of 12.85% and a past 5 year annual growth rate of over 20%, the company has shown they are fully capable of achieving growth estimates.
Suncor Energy (SU.TO)
**Daniel Kent and Mathieu Litalien are long SU.TO
Our only oil and gas play in this moderate risk portfolio, Suncor provides one of the most reliable dividends in the country with a 3.82% yield and a 71.29% payout ratio.
The Alberta election has come to a close and a United Conservative victory could bode very well for the oil and gas industry. Although changes wouldn’t happen overnight, the UCP’s platform is heavily weighted towards making big corporations, particularly those in oil and gas, happy again.
The reduction in corporate taxes and the urgency to get shovels in the ground for pipeline projects could spark some investor urgency in the oil and gas sector. And if changes do come, in time we may see a little life breathed in to a struggling industry. As such, we will continue to hold Suncor in this portfolio.
Bank Of Nova Scotia (BNS.TO)
The Bank Of Nova Scotia has actually hit number one on our growth screener this week and much like the other Canadian Banks is significantly undervalued. The stock has a forward P/E of under 10 and analysts predict a 6.30% annual growth rate over the next 5 years for the big 5 bank.
Now, that growth rate isn’t impressive on its own, but combine it with a near 5% yield and a 50% payout ratio and you’ve got a strong opportunity to make some solid gains on an industry that is one of the strongest in the world.
There’s no reason to budge on BNS in this portfolio.
Brookfield Asset Management (BAM.A)
Our real estate play in this portfolio, Brookfield is in my opinion one of the strongest stocks to hold in the country. As individual investors, it’s very hard for us to gain international exposure. Buying foreign stocks is expensive, and often a nuisance.
Brookfield gives us international diversity with a click of a button. The stock has returned over 20% since its October purchase, and its dividend yield of 1.36% isn’t anything to write home about. But the company has absolutely crushed both earnings and sales projections over the last year. The company has beat sales expectations by an average of 154.7% over the last year, and earnings projections by 1299%.
GoEasy Ltd (GSY.TO)
**Mathieu Litalien is long GSY.TO
GoEasy is in a very interesting position. The company is an alternative lender, and if you haven’t noticed recently, alternative lenders are all the rage. Although GoEasy doesn’t offer mortgages like Equitable Bank (EQB) does, the company still offers alternative ways to get money to fund your goals that isn’t coming from a big 5 bank.
Banks have extremely tight guidelines and regulations they have to follow in order to give out loans. Alternative lenders are not regulated by the same bodies, and in a way define their own rules. GoEasy is one of the strongest growth stocks in the country right now, and the stock has increased 42% in value from late December of 2018.
I strongly believe the alternative lending industry is going to do nothing but grow in the next while, and analysts are just as bullish. Analysts predict GoEasy will achieve 21.60% in annual earnings growth this year, and we’ll be sticking around for the ride.
**Daniel Kent and Mathieu Litalien are long SHOP.TO**
The highest risk growth play in this portfolio has paid off massively over the last 6 months. Shopify has increased in price by over 75% and is the driving force in this portfolio currently outperforming the TSX by a wide margin. The company has a track record of beating estimates, and I believe they will continue to do so in the future.
Make no mistake about it though, the stock is expensive right now. With a price to book of over 13.50 and a price to sales of over 26, I wouldn’t be buying at these price points. However, I’m definitely holding. Analysts are predicting a 5-year annual expected growth rate of over 60% for the company.
However, it may be a rocky ride to get there. At some point, investors are going to be expecting Shopify to post a profit, so we’ll have to keep a close eye on earnings in 2019.
Shopify holds a 20% allocation in this portfolio, and as such we will be selling half of our position to eliminate some of the volatility Shopify brings.
**Daniel Kent and Mathieu Litalien are long FTS.TO
If you’re looking for stability, Fortis is probably one of the best companies to look at. The company has a dividend streak that spans over decades (40+ years) and its 3.66% dividend with a 66% payout ratio is about as strong as it gets. The company does business in a highly regulated industry where cash flows are often consistent.
The fact the stock has returned over 13% to investors since its purchase in October is just icing on the cake.
CNRL (CNQ.TO) (Will be added May 8th 2019)
With only 7% of the holdings in this portfolio being oil and gas, I’ve decided to add a new company to the mix. CNRL is a low cost Canadian producer of petroleum products and should be a primary beneficiary of an Albertan UCP government.
The stock provides a healthy dividend of 3.76% with a 63% payout ratio and analysts are predicting some solid growth in the company with a 10.44% annual growth rate over the next 5 years. The stock is relatively cheap right now, trading at a price to earnings of only 14.01 and a price to book of 1.59.
The company missed expectations heavily last quarter, but has generally outperformed expectations beating both revenue and sales estimates in 4 of the last 5 quarters.