Q: I was thinking of adding my recent TFSA contribution to EQB however then started wondering if some of the growth oriented US$ holdings in the account would be a better option. 5I has been positive about EQB but I wonder if it will have a lack lustre performance due to it being in the weak Cdn economy….that is, it may be a good company but limited to how well it can do. Your thoughts about all this, please. Thank you for your excellent service.
5i Research Answer:
While we do think the US will outperform Canada, we do not think investors need to abandon Canada. EQB has a good niche and nice potential, and is priced very well at 8.3X earnings. We would not consider it a SELL. That being said, if it is already owned we would be fine adding a US holding, such as JPM in financials, or GOOG in tech/communications, for diversification as well as higher growth potential.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in GOOG, JPM.