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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Hi 5i Research team,
Walgreen’s announced a 100% cash take-over Rite Aid at 9$. The competition Bureau will review the transaction (I am relatively optimistic based on the recent Staples/Office Depot merger; the larger size of CVS; and competition from everywhere else in the US market). The closing is forecasted in the second half of 2016. I am wondering what to do (hold / sell on strength? / sell on strength in 2016).
This investment is outside my RRSP/TFSA: meaning large taxable gain (with only a small capital loss earlier this year to net against). The Federal Liberal may change taxation on capital gains before the closing of the transaction. I am using margin in this account: I pay about 2.75% of interest on the full amount backing RAD shares. RAD.US is currently trading around 8$ early Wednesday morning: therefore there is still about 11% of return to be made by waiting. There is an “opportunity cost” to wait, that could also be an “opportunity profit” of not reinvesting before the Fed make its first interest hike and shake the financial markets. The exchange rate could/will change (difficult to forecast, but my anticipations are: US appreciate versus CAD following a US rate hike in early 2016 => so no hurry here). US funds from this transaction will be immediately converted into CAD cash in my account.
Two US lawyers firm lunched a recourse against the board for accepting an offer that is too low, therefore not in the best interest of the shareholders (is there potential upside here?). Is it possible that Walgreen’s rise its offer without a competing bid? Can you reasonably expect a competing bid? If yes, could you named some potential alternative buyers (Walgreen’s has long been the main potential suspect). And finally, there is always the risk of the transaction not closing.
Am I forgetting something? Based on this picture, what do you recommend? Thank you for your advice, Eric
Read Answer Asked by Eric on October 28, 2015
Q: Can you please comment on ESP's latest results. Which company would you recommend in this sector?
Read Answer Asked by Imtiaz on October 28, 2015
Q: Hi, Can you advise what the estimates are ahead of the Q3 releases this afternoon for MDA and CSU please. I am sure there will be questions regarding your assessemnt of the release tomorrow for follow up. Second, I unfortunately own some IRL (Minera) which is requesting to be delisted from the TSX. Can you advise what typically is the next step for shareholders in these cases outside of using share certificates for kindling?

Thanks,

Eric
Read Answer Asked by Erichsen on October 28, 2015
Q: Peter and Team,

My portfolio is largely in line with the balanced equity model portfolio. I currently have 3.9% of the portfolio in IPL. I wondering if I am better off keeping IPL or moving that money (and may be increasing the position to 5%) to Brookfield Renewable Power. It feels like the world is shifting to renewable regardless of economics and I am wondering if BEP will give me a better long term return than IPL. As a piece of side info, I hold stock in TransCanada as well.

Thanks for the input.

Marc
Read Answer Asked by Marc on October 28, 2015
Q: please tell everyone that a stock which is down 2% - 3% is not "plunging" or "getting hammered"

that's a media term for "please please please watch/read more here"

I think "plunging" should be reserved for 20%+ drops and "getting hammered" should be reserved for Fridays


Read Answer Asked by Robert on October 28, 2015
Q: Hi Peter & Team,
How much importance should we allocate to debt/Equity ratio?
For example: Ratios for VNR, BEP.UN and RY are 5.39, 2.03 and 0.13 respectively. From these ratios, we should stay away from VNR and BEP.UN yet they are both included in your income portfolio and BEP.UN has A rating. The ratio for VRX is 4.76
Thanks
Read Answer Asked by Karl on October 28, 2015
Q: I own Canexus The shares were valued at $ 1.70 in exchange for spb shares I like spb for the dividend

now trading in the mid & 1.30 Is there an opportunity here
why are the shares trading at such a discount Your advice is appreciated
Paulh
Read Answer Asked by Paul on October 28, 2015
Q: Hi Peter et al.,
I have an overweighting in CDN stocks in my RSP/RIF accounts. Where could I find info on CDN companies who derive their sales/profits mostly in the US? Is there an ETF with such a configuration?
Thanks
Derek
Read Answer Asked by Derek on October 28, 2015
Q: I am looking to take advantage of the expected year end rally. I would appreciate your recommendation for any stock or ETF's with the best expected momentum and your view on this strategy.
Thank you as always for your wise advise.
Raouf
Read Answer Asked by Raoul on October 28, 2015
Q: Any thoughts on PM's quarterly numbers? There seems to be an enormous chasm between the expected earnings per share and what Prism actually delivered. Taking into account the one time items, the gap closes a little but still I'd like your expert opinion on the numbers.

Revenues were up nicely but earnings fell significantly. Do you see anything in the numbers that raises a red flag or cause for concern?

2016 earnings per share estimates were 75 cents, prior to today's q3 numbers. Any guesses what the new estimates will be for 2016?

Thanks for your time.

John
Read Answer Asked by john on October 28, 2015
Q: Hi Peter and Team,

I saw this article on National Post that could be driving down ATD.B. Sounds like Credit Suisse analysts are saying that its price to cash flow ratio is inflated and that it's driving a bubble in consumer stocks. What are your thoughts on this? I have a fairly large position (~8%) in ATD.B and don't want to get caught in a sector falling out of favor (like what just happened in biotech).

Jordan
Read Answer Asked by Jordan on October 28, 2015
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