Q: Hi Peter, with TD results out including penalty news and CNR hanging towards low end, do you think these are close to bottom yet or expect more correction in sept due to tax loss selling? Thanks
5i Research Answer:
It is hard to time the bottom in these names. Although the two are experiencing near-term challenges in earnings growth, these are two solid businesses that will very likely be around for decades. We think as long as the investment thesis remains intact and the share prices offer attractive prospective returns (which they do), investors can initiate or add to the position, and leave room to average into the position over time if prices drop to more attractive levels. We don’t think anyone can time the bottom perfectly. The strike may end soon with arbitration, and the provision for TD at least clears up some uncertainty, which can be good for a possible stock recovery.