Investment Q&A

Q: Hi 5i Research Team:

I have traded Forex before and am new to stock trading. 90% of my RRSP, RESP and TFSA is in cash and I'd like to avail the current market conditions by "gradually" buying the dips.. and holding it over the long term, 5 to 10 years. I understand that no one can time the market or its bottom.

After exploring the reports and questions on your site, I have identified the enclosed 29 stocks based on following criteria:
- Current Retracements of > 75% over 52 week high & low
- Dividend Yield > 5% (in some cases, like WEED, which is a bit risky, I understand there's no dividend in the near term.. and I am simply going for the upside swing over the next 2 years... same for CRON and Air Canada)

Considering my 90% cash position and strategy to partially buy in on dips over the next few weeks, can you please advise if my stock selection is sound. In addition to my stock picks, please advise anything else that I should keep in mind.

Thanks for everything you do. Much appreciate.

Q: 7:50 AM 3/18/2020
Hi
Are you suggesting selling A&W in your reply this morning to Andrew on March 18, 2020. You said "YUM and CBRL have debt. AW.UN also does, and its cash flow depends on restaurant sales' royalties. We would be very very cautious here. It is better to miss out on a potential gain than to watch capital potentially disappear. "

Do you think A&W will survive till the virus crisis is finally over and patrons return?
Thank you............. Paul K

Q: Hi, I'm a retired, dividend-income investor. I took some profits and losses (to wipe out potential capital gains) over the last 5 weeks and am now planning on reinvesting the cash to top up some of my existing equities, up to my desired asset allocation. I want to leg in, in probably 3 waves over the next couple (?) of months, to top up ZWC, AD, AQN, AW, BNS, BCE, LNF, NWC, RY, TRP, WSP.

Can you please indicate which of the above equities you would allocate into which wave (in other words, does it look like the equity is "ready" for an investment OR should I continue to wait for a while)...or not at all (not worth any further investment).

Thanks for your help...Steve

Q: Which companies do you think might not survive the crisis and it's better dumping now while they still have value? I think you have mentioned the oil producers and what about restaurant stocks? I just listed a few examples here of both.

Q: Any idea why A&W would drop a huge 20% on Monday? Thats way beyond the average 10% drop! would you agree that it looks like a pretty good buy here?

Q: Please comment briefly as appropriate on the above stocks covered by 5i. Add,sell or hold? 1)EIF 1.5% position/ p/p$44 / Investment a/c. Recent big drop to $32.19 2)SU 1% / $42.59 / RIF. Sharp drop in oil price 3)AW.un 1.5% /$43.63 /Inv.a/c. 4)Real 2% / $14.25 / Tfsa. Sharp drop today. 5)STC 1% / $2.47 /Tfsa. Down since recent Q. 6)Ray.a 1.5% / $9.70 / Rif. Down trend.Decent results,but no love. 7)Qst 1.5% /$5.01/ Rif. Very sharp drop last few days. 8)Hr.un 3.5% / $21.33 / Rif. Its building in Calgary is leased to Ecana,now IVV( US$2.60.) Thanks for u usual great services & views

Q: Retired, conservative dividend-income investor with a "buy-and-hold & trim-add around a core position" strategy. At times like these, I take a fresh look at my holdings and ask two key questions. #1 = are there any of my equity holdings that have alarm bells going off? #2 = how safe are the dividends (knowing that no dividend is 100% secure)? The portfolio capital may rise or fall, but it is the continuation of the dividend that is more important.

For asset allocation purposes related to individual stocks (as opposed to sector allocations), I use the following:
5% targets = AQN, BCE, BNS, PBH, RY, TRP, WSP
4% targets = AD, AW, CSH, NWC
2% targets = LNF, MG, NTR
ETF targets = roughly 3-7%

Q#1 = are there any of these equities that you hear alarm bells?
Q#2 = are there any of these equities where you foresee dividend risk?
Q#3 = any thoughts on how I have my asset allocations set up (knowing it is a very personal decision?

Take a bunch of credits. Thanks for your help...Steve

Q: Hi...just read your March 1 email....very timely. I have been evaluating some of my current equity holdings from the point of view of topping up some or all of them over time...to reach my asset allocation targets. I do a monthly review of all of my holdings using metrics like P/E, P/BV, P/CF, ROE, Beta, Analyst targets, charting vs 200 mda and higher highs-lows. Mid-Feb I raised roughly 5% cash (basically trimming oversized positions that also appeared to be stretched) and could direct it to the above list. I am a retired, dividend income investor.

The 4 BNN Market Call guests on Thursday-Friday indicated that legging in to this buying opportunity should be considered, as, in their opinion, the market is extremely oversold. In your past life as a Fund Manager, what metrics did you use to guide your process on whether to buy or sit on your hands? For example, "when the VIX is high, it is time to buy"...the VIX is now at 40.

If this is a fair question, could you rank the above 9 equities for topping up to existing positions? My process, for example, has identified LNF as one of the priorities.

Take as many credits as you think appropriate. Thanks...Steve

Q: I intend to diversify away a bit from the Brookfield family as I already have BEP.UN and BIP.UN.

Within my RRSP I intend to sell BYP.UN and am interested in buying AW.UN. It appears that A & W's debt is under control. Dividend growth appears to lack a bit of consistency though.

How good is their management?
Would you expect about 7 or 8% total return going forward?
Morningstar Fair Value is about $35. Would you agree?
Would a 5% position be too much for this type of stock if we were to go into a recession?
Do you have any concerns over the 20% drop from its highs?

Thanks.

Q: Hi guys can I have your take on the results
Kind regards
Stan

Q: The Earnings section of the Company information is blank. Can you get your data provider to add this...thanks for trying.

Do you have the most recent analysts estimate of the target price? Roughly a month ago Royal Bank had a target price of $45.00. Now, they don't have any target information on AW anymore.

Thanks...Steve

Q: I realize you prefer AW over PZA. I have owned PZA for some time now down about 20%....I can't make a strong enough case to replace PZA with AW to more closely match your portfolio. With the drop it is below a full position so technically needs to be topped up as I free up some cash. Can you make a case for selling PZA or do I just continue to hold it as a surrogate for AW in my portfolio. I am leaning towards topping up PZA to a full position and getting 8.9% yield off the div....

Tom

Q: Please provide your suggestions for non US investments of above 3.5% yield and some growth and somewhat protected from volatility in Canada and internationally. Thanks.

Q: I'm continuing to rebalance my portfolios. The above stocks are in my income portfolio and are less than full positions. Would you sell any of them? I have enough cash on hand to top up two of them. Which would you top up. (I hold 22 diverse stocks in this account)

Q: With gains over the past year, I'm overweight in these holdings - BAM 7%, BEP 12%, BIP 8%. I'm not uncomfortable with BAM and BIP but BEP is high.
Do you think there is more short-term upside in either BEP or BIP due to the addition of corporate structures?
What overall weighting would you recommend for these 3 companies and do you have a preference for any - these would be long-term holdings (8-10 years) in an income focused portfolio?
If trimming is recommended, what are your top 3 recommendations for reliable and growing dividend paying stocks, sector not being an issue?
Thank you
Ian

Q: I've been holding this stock for 3 years. From March of 2017 the stock has appreciated by $1 from wence I bought it and yes I have been receiving a 5% dividend.

However during that time period I have owned BCE, FTS, BEP etc which have done markedly better on a total return basis.

My experience is this is a strict dividend play and I was wondering if I wanted a more growthy income play is there a few equities that you could say you like better than this one which offers a healthy dividend and perhaps some capital appreciation potential as well.

Please offer a few suggestions as I currently have a very extensive portfolio.

Thanks

Sheldon

Q: I would like to pick a few names from your income portfolio for my child’s RESP. She is 13 years now, so, I don’t have the safety of very long term hold. Can you short list the top 5 that pose minimum risk of value and dividend decline in that time frame?

Q: Could A&W be considered a candidate to be bought out by someone like MTY group or anyone else
Thks
Marse

Q: What does the early warning report issued by AW mean to stock holders and the stock Price?

Q: I am in my early 30’s. In terms of creating a strategy for buying and selling stocks shouldn’t I just always be buying stocks, even if the market goes down?

If I have a 30-year run way until I start withdrawing or using the funds wouldn’t it be best to just find great companies to average into?

Your thoughts are greatly appreciated in advance.

Thanks,

Dave