Our most aggressive portfolio out of our 9 model portfolios, the Millennial Aggressive has struggled to date, posting gains of only 13% compared to 15+ of the TSX.
The main drag on this portfolio has been the purchase of SIS and PBH at a peak price. This has also left us in the situation where we can’t really do too much with this portfolio. The rest of the portfolio is performing extremely well, and even with 70+% gains in Shopify, it still remains well balanced. There will be no changes to the Millennial Aggressive portfolio in this quarter and we will just have to be patient with PBH and SIS, as the investment thesis hasn’t changed on these companies.
Savaria (SIS.TO) –
** Daniel Kent is long SIS.TO
In my opinion, Savaria is one of the best growth stocks to own on the TSX right now. The company should be able to capture and take advantage of a growing market. There is no question the population is getting older, and the market for mobility related products will be increasing.
Savaria’s price took a hit because of a share offering made a couple weeks ago. Investors don’t like when you dilute shares, and they have good reason not to like it. However, I’m on board with this share offering as it is going to allow the company to expand future growth and solidify their balance sheet.
Savaria has been relatively inline with analyst estimates over the last 5 quarters, and I have zero reason to lose any faith in the company at this point.
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.
Premium Brand Holdings – PBH.TO
Premium Brands has lost 15.62% since we purchased the stock for the portfolio back in October, and if anything, this represents a strong buying opportunity for those looking to get into a true triple threat.
The company has an excellent dividend with a yield of 2.55% and a payout ratio of 62.91%, excellent growth prospects with a 24% annual expected growth rate over the next 5 years, and very strong value with a 5 year PEG of 0.75, a price to sales of 0.75 and a forward price to earnings of 15.35.
There’s no sense in budging on PBH right now in this portfolio, and as such it will be staying put.
Intact Financial (IFC.TO)
IFC has saw some healthy gains since October, increasing in price by 10.38% at the time of writing. The company has a solid dividend of 2.70% with a 58.46% payout ratio with a 5-year expected annual growth rate of 11.70%.
The company has continually rewarded shareholders in the past with some strong growth, and will more than likely continue to do so holding 1/5th of the market share in the insurance industry. And as you probably know, the insurance industry isn’t just something a company can step into and succeed. The barriers for entry are ridiculously high. And as such, I feel IFC’s revenues and growth are some what protected.
The management group has proven they can provide consistent growth to shareholders in the past, and I expect them to do it in the future.
Parkland Fuels (PKI.TO)
**Daniel Kent is long PKI.TO
Parkland is a company in this portfolio that we’re going to need a little bit of patience with. The stock was purchased at the high end of things back in October and is finally getting back to that price 6 months later. However, the growth prospects of the company are quite possibly the brightest within the portfolio. A 2.92% dividend yield (albeit a high payout ratio of 76.50%) is a huge bonus. The company has topped estimates in sales over the last 5 quarters, yet struggled with earnings, missing in the last two.
With earnings growth over the last year of 151% and five year earnings growth of 20.9% on average, the company has proven it is capable of strong growth. So for that reason, we’re holding strong.
**Daniel Kent and Mathieu Litalien are long SHOP.TO
Shopify has been quite the revelation over the last while. The stock has brought the bulk of the performance in this portfolio, gaining 72% since October.
The company continues to grow at a rapid pace, hitting double digit sales growth every year. Its growth is slowing yes, but it’s still extremely strong. The stock is prone to some heavy volatility, especially if the company posts a sub-par earnings period.
The balance is still well maintained in this portfolio, with a 13 percent allocation to Canadian tech stocks. And while some would say we’re putting all our eggs in one basket with Shopify considering it is the only tech stock we own; we’re willing to run with that right now. It will be reviewed in a later quarter, and we may end up cutting our position.
Parex Resources (PXT.TO)
I identified Parex as severely undervalued when I built this portfolio, and that decision has paid off quite well. The company has returned over 20%. Revenue has been tough for the company in terms of estimates, but I think investors are more so looking at the fact it has been able to blow earnings projections out of the water. Past 4 earnings reports by the company have exceed analyst expectations by 174, 11, 119 and 45 percent respectively.
The best part about all of this is Parex has absolutely no debt on its balance sheet, an anomaly in the investing world. Whenever you see a company grow on internal funding exclusively, its usually a good sign. It also allows them to expand quicker if need be by adding debt without any worries.
Toromont has been a mixed bag in terms of earnings, consistently beating both revenue and earning estimates one quarter and missing the next. However, I still believe in the company and its returns over the life of this portfolio have been healthy. There is a UPC government in place in Alberta, and their platform largely focuses on getting Albertans back to work by cutting corporate taxes and getting pipelines approved.
For an equipment rental company, one that specializes in Caterpillar equipment, this can only mean good things.
Canntrust was probably by far the riskiest play in this portfolio, and it actually hasn’t done too bad since October. However, I’ve expected more from the company and so have analysts. The company missed both revenue and earning estimates last quarter by a wide margin (23% on revenue, 525% on earnings) and the company has been on a bit of a tailspin since.
With a high risk play like TRST, I expected more than 13% return since October. But, it’s important to be patient. I believe in this company, and I believe that it is one of the stronger cannabis companies out there. The cannabis industry is no doubt a long term play, but I’ve got to keep a keen eye on Canntrust over the next couple quarters, as companies within the industry are susceptible to some extreme volatility.
Innergex Renewables (INE.TO)
Innergex is a long-term play in this portfolio. But in the short term, the stock has done nothing but please. Any renewable energy investment right now is banking on the future, one that I believe is inevitable. Eventually fossil fuels will be phased out and renewables will be the main form of energy. Whether that takes 20 years or 50 years, it will happen.
Looking at the now, Innergex has had a fantastic last 5 quarters. The company has beat revenue estimates for 2 straight quarters, and 3 of the last 5 in total. In terms of earnings, the company has struggled a bit over the last 5 quarters, but in particular the last 2 have been quite surprising. The company beat last quarter by $0.11. Analysts were predicting a loss of $0.02 and the company posted an impressive profit of $0.09. Prior to last quarter, the company doubled up analyst expectations, posting earnings of $0.16 when $0.08 was expected.
In terms of renewable companies, ones that at least provide a high level of return, I can’t think of a better one on the TSX than Innergex. This stock may not provide the wow factor in the short term, but years down the road you may be very happy you made a purchase of the stock. The one thing I am concerned about however is the stock is very expensive, trading at nearly 70 times earnings. And their dividend is a little unstable right now with a payout ratio of over 300%.
Canada Goose (GOOS.TO)
**Daniel Kent is long GOOS.TO
Canada Goose has somewhat stalled since a very successful IPO in 2017. Since hitting 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 11.06% 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.
Boyd Group Income Fund (BYD-UN.TO)
Boyd Income Fund has been a pleasant surprise in this portfolio, returning almost 25% since its October inception. The stock in my opinion is a safer play, due to its defensive nature. People will be doing auto and glass repairs during a recession. They still need to get around, and as such I see this stock performing well in poor market conditions.
The company has either hit the mark or impressed in terms of both revenue and earnings over the last 5 quarters, and there is really no reason to do anything other than hold this stock. The company has a low yielding but solid dividend, with plenty of room to grow.