Stocks to Consider for the Longer Term

With the market generally winding downwards, it has been near impossible to make any substantial recommendations for stock trading, which is the goal of this blog. However, as certain great company stocks break past or even close to new 52 week lows, it opens up opportunities to pick them up at near bargain prices, at least for smaller positions. Take a look at the following:

Financials: Bank of Montreal (BMO), Scotiabank (BNS), CIBC (CM), Great West Life (GWO), National (NA), Royal (RY), Sunlife (SLF) & Toronto Dominion (TD). Look at the yields and P/E’s. Sunlife is paying near 6% in annual dividends, many of the banks close to 5%. Why purchase a low yielding bond ? The corporate fixed income market is probably not as secure as we’d like to think anyway…

Energy: Canadian Natural Resources (CNQ), Encana (ECA) paying a 3.5% dividend ! & Suncor (SU). Even 2^nd stringers like Nexen (NXY) & Talisman (TLM) look interesting.

Resource-Industrial +: Agrium (AGU), Canadian National Rail (CNR), Canadian Pacific (CP), Potash (POT), Teck Resources (TCK.B). Careful with precious metal stocks, you never no how the wind can abruptly change. The agriculture stocks have held up reasonably well of late.

Safety Play: BCE. Continually churning out revenue and profits, almost irrespective of the economic conditions. Good luck, stay defensive but be open to possible longer term picks.

Market Opportunities

The market has been swinging wildly with the professionals utilizing the media to scare the smaller retail investor to unload while the market craters.  Someone will be making a lot of money having purchased great companies at value prices. Keep your cool and watch as the opportunities unfold.  

Financials: Many Canadian financials have hit or are very close to new 52 week lows. These corporations are much better capitalized than those in the US and are beginning to look very attractive with solid dividend payouts. Top of the list to watch include: Bank of Montreal (BMO), Scotia Bank (BNS), National (NA), Royal (RY) & TD. There will be an opportunity very soon (if not now) to pick these up at discount rates. Insurance companies are worth watching but offer a little less safety.

Resources: Energy, Agriculture & Mining stocks have all been hit hard as the media advises us of a world slowdown that will impact demand. Yes, demand could be impacted, but to what degree as the world’s population continues to grow, particularly the middle classes in the BRIC countries ? Keep a close watch on these great companies: Agrium (AGU), Canadian Natural Resources (CNQ), Potash (POT), Suncor (SU), Teck Resources (TCK.B). Canadian National (CNR) is a perfect compliment to this group.
Safety Plays: Telecoms have faired very well throughout the recent turbulence. BCE & Telus (T) offer rich and reasonably safe dividend yields.

Value Investing Theory: When the market is swooning, great companies’ stock prices fall in tandem with the worst of companies. However, don’t get too smart as the market might have further to drop. Good Luck.

  

Is Now the Time to Consider Getting Back into the Market ?

I’ve taken off the past number of weeks because this is a stock trading blog. As there really hasn’t been much to recommend for a trader to consider,  there was theoretically nothing to write…

Trading Rule Number One: When all others are selling in a down market, smart traders should look to buy great companies that are being sold off along with the weak ones. Great Market Timers always buy when everyone is running for the hills (albeit it’s quite easy being brave if you’re only handling other people’s money…). Something is happening now that is going to make someone a lot of money in the next few months. Scared traders are being spooked out of the market. We certainly may not be at the bottom so no major positions are recommended immediately, but there are some good deals becoming available.

Great Market Leaders Coming Off Highs: In alphabetical order this would include: BCE (now paying 5.7% dividend), Bombardier (BBD.B), Canadian National Railway (CNR), National Bank (NA), & TD.

Great Companies Available at Discount Prices: In alphabetical order, great companies that may not have performed in recent months as well as those noted above: CIBC (CM), Canadian Natural Resources (CNQ), Canadian Pacific (CP), Encana (ECA), Royal (RY), Sunlife (SLF), Suncor (SU), & Talisman (TLM).

Great Companies To “Possibly” Watch for Further Declines Prior to Re-Purchasing: Canadian Oil Sands (COS), Crescent Point Energy (CPG) & Teck Resources (TCK.B).

Other Stocks of Interest: Power Corp. (POW) & Power Financial (PWF).

Long Shots to Watch: Research in Motion (RIM), Sino Forest (TRE), & yes, Yellow Media (YLO).

Worth Watching: Bank of Montreal (BMO), Scotia Bank (BNS), Manulife (MFC), & Pengrowth (PGF).

Watch the market very closely now for both getting out and in. Good luck.

 

  

New Opportunities in a Struggling Stock Market

With the TSX down 3.21% this past week, that puts the index in the negative column for 2011. For the shorter term investor/trader, there have been a few stocks where quick trades can net substantial gains. However, this requires the investor to spend a good deal of the day watching the screen. Please review the enclosed list of different stock opportunity categories:

Overall Strength during Market Weakness: For short to long term gains, a few stocks have demonstrated overall strength and market leadership. These include all the telecoms BCE, Rogers (RCI.B) & Telus (T). Other stronger performers include: Bombardier (BBD.B) & Lululemon (LLL).

Recent Market Strength versus Competitors include: Encana (ECA) & Potash (POT).

Value Opportunities on Recent Stock Weakness include: (1) The financials, particularly Laurentian Bank (LB), National Bank (NA), RBC (RY), Sunlife (SLF) & Toronto Dominion (TD). Watch Power Corp (POW) & Power Financial (PWF) for longer term opportunities. (2) The precious metals sector has also shown weakness even though metal prices are quite strong. Longer term opportunities in this sector include: Agnico Eagle (AEM), Barrick Gold (ABX), Eldorado Gold (ELD) & Goldcorp (G). CNBC’s Fast Money (Monday) recommended watching Silver Wheaton (SLW) for future gains albeit with lots of price fluctuations to be expected along the way. (3) Additional good value picks with strong dividend payouts include: Crescent Point Energy (CPG) & Pengrowth (PGF). Penn West (PWT) & Vermillion (VET) would count as secondary picks in this category.

Stocks to Watch Closely: The metals sector including Hudbay Minerals (HBM), Labrador Iron Ore Units (LIF.UN), Lundin (LUN), Thompson Creek (TCM), and Teck Resources (TCK.B). These have all been suffering of late and stand to increase substantially by early next year.

Stocks for Market Traders this week include: Research in Motion (RIM) announcing quarterly results on Thursday, Sino Forest (TRE) & Yellow Media (YLO). I won’t predict the direction of these stocks (probably negative) but there will lots of price movement. Enerplus (ERF) consistently demonstrates volatility.

Other Long Term Selections: For growth by next year, my traditional picks of Agrium (AGU), Canadian Natural Resources (CNQ), & Suncor (SU). Market sentiment is still somewhat negative so be careful. Have a great week ahead.

 

Opportunities in a Turbulent Market

Another difficult week in the market. However, this presents new opportunities for quality stocks that have been hit hard of late. Take a look at these:
Financials: Top New Picks: Laurentian Bank (LB) which suffered a 9.88% decline this past week. Certainly not my favorite ordinary stock pick but the sharp decline offers mid-long term reasonably solid growth. Royal Bank (RY) has been hit hard of late and rates a strong mid-term buy. Other financial stocks looking primed for mid-long term gains include: CIBC (CM), National Bank (NA) & Sunlife (SLF). TSX Group (X) has shown strong momentum of late.

Resources: Top New Picks: Eldorado Gold (ELD), Russel Metals (RUS) & Viterra (VT) which suffered a 6.81% loss this past week. Still on the buy list for mid-term gains include: Agrium (AGU), Agnico Eagle (AEM), Barrick Gold (ABX), Canadian Natural Resources (CNQ), Labrador Iron Ore Units (LIF.UN), Potash (POT), Suncor (SU), & Talisman (TLM).

Strong Momentum: Worth noting are stocks that have performed well in this drab market. These stocks include: BCE, CN Rail (CNR), Telus (T) & Trans Canada Corp (TRP). Newly added is Bombardier (BBD.B).

Speculative Picks: “Perennial Speculative Pick” Research in Motion (RIM) along with Yellow Media (YLO) – the preferred shares as noted last blog had a wild swing and big profits could have been made for those stout of heart investors. Imagine big quick profits from preferred shares ? Newly added is Toromont Industries (TIH) which suffered a 34.53% decline this past week. For fun, watch the action on Sino Forest (TRE) which dropped 71/56% this past week ! There are a few new picks worth strongly considering in particular the financial stocks listed above. Have a great week ahead and enjoy the heat.

 

Market Fundamentals Improving ?

 

15 of 17 stocks recommended last blog (2 weeks ago) increased in price for an average 3.80% gain. Top gainers included Teck Resources (TCK.B) +12.20%, Potash (POT) +9.56%, Agrium (AGU) +8.28%, Silver Wheaton (SLW) +8.27%. The one substantial loser was Lundin (LUN) -16.36% on news Thursday.

8 of 9 additional “hot stocks” noted increased with 4 hitting new all time highs including Canadian National Rail (CNR), National Bank (NA), BCE & Telus (T).

CNBC’s Fast Money recommended watching precious metal and energy stocks for gains in the near future.

Top Stocks to Watch in these categories include: Precious Metals: Agnico Eagle (AEM) , Goldcorp (G), Silver Wheaton (SLW) & Top Pick Barrick Gold (ABX).

Energy: Both Top Picks: Canadian Natural Resources (CNQ) & Suncor (SU). Agriculture: Both Top Picks: Agrium (AGU) & Potash (POT). Watch Teck (TCK.B).

New Value Selections: based on recent weakness (for longer term appreciation) CIBC (CM), Royal Bank (RY) & Lundin (LUN).

Speculative Picks: Research in Motion (RIM) & Yellow Media (YLO). Note that Yellow Media’s Preferred Shares are now delivering VERY HIGH income (assuming they can maintain payouts): YLO.PR.B 7.62%, YLO.PR.C 9.48%, YLO.PR.D 9.23%.

Other Picks include: Income: Crescent Point Energy (CPG), Pengrowth (PGF) & Preferred’s: BBD.PR.C 6.409%, BPO.PR.L 6.358%, CWB.PR.A 6.663%.

Positive Momentum Stocks include: (buy on dips) BCE, Telus (T), Canadian natural Rail (CNR), TransCanada Pipe (TRP). Could be a start of improving market fundamentals. Keep a close watch on above noted stocks for direction. Good luck.

Struggling through Market Weakness

As predicted, the month of May is generally cruel to investors. With the TSX down over 4% over the past two weeks, that puts the overall market’s performance in the negative column for the year 2011. This could be a sign to slowly pick up some great companies at lower costs. It also shows which companies have survived the turmoil intact.

Strong Performers in May have included: Canadian National Railway (CNR), Crescent Point Energy (CPG) which also pays a 6.19% annual dividend distributed monthly, Encana (ECA), Grande Cache Coal (GCE), National Bank (NA), Pengrowth (PGF), Penn West (PWT), plus all the high dividend paying telecoms, particularly BCE & Telus (T.A), both of which hit 52 week highs.

Conservative picks still available include: Preferred Shares: BBD.PR.C (6.47%), BPO.PR.L (6.345), CWB.PR.A (6.59%), BPO.PR.N (5.93%), LB.PR.D (5.92&) & NA.PR.O (5.95%). In the fixed income category, Bell Alliant offers some 5-8 year out corporates paying between 3.52% - 4.80%. In the 8-10 year out category, paying between 4.8% - 4.98% are Shaw, Transalta, Brookfield, Enbridge Income & Rogers.

Great Companies Moving Forward: many great stocks have been hit hard of late and their current price could offer considerable upside if held for the next 6-10 months. Divided into their respective categories, these include:

Energy: Canadian Natural Resources (CNQ), Suncor (SU) & Talisman (TLM). Precious Metals: Agnico Eagle (AEM), Barrick Gold (ABX), Goldcorp (G), & Silver Wheaton (SLW). Metals: Hudbay Minerals (HBM), Labrador Iron Ore Units (LIF.UN), Lundin Mining (LUN), Teck Resources (TCK.B), & Thompson Creek Metals (TCM). Agriculture: Both Agrium (AGU) & Potash (POT) have pulled back severely of late and should be much stronger by next year.

Other Opportunities: Canadian Pacific (CP), Research in Motion (RIM), Rogers Communications (RCI.B), Sunlife (SLF).

Keep a cool head under fire ! There are several opportunities unfolding for long term gains. Good luck.

 

 

New Stock Opportunities

Events of the past week including some dramatic pullbacks provide mid-long term opportunities worth considering.

These include the following: Barrick Gold’s (ABX) bid to purchase copper producer Equinox Minerals (EQN) resulted in the stock suffering an 8.95% drop this past week. The stock, along with Goldcorp (G), had previously shown remarkable strength, and the pullback should be viewed as an opportunity to acquire a major precious metals’ producer.

Research in Motion (RIM) delivered its “usual” disappointing results & guidance and was handed a 10.14% weekly thrashing. While the company has disappointed over the past months, the current price should be viewed as a signal to buy on weakness. While a more speculative choice, the stock should provide for excellent returns if held until the next software/electronic peak stock appreciation period of December-January.

Mid Term Stock Selections include: Agriculture: Agrium (AGU) & Potash (POT). Mining: Grand Cache Coal (GCE), Labrador Iron Ore Units (LIF.UN), Silver Wheaton (SLW) & Teck Resources (TCK.B). Financials: Based on recent pullback, check out TD Bank (TD). I also like National Bank (NA) & Sunlife (SLF). For income: Crescent Point Energy (CPG), Rogers (RCI.B) and other telecoms BCE & Telus (T). A more speculative income selection is Yellow Media (YLO) which has been hovering near 52 week lows of late.

The above selections are all noted as being mid-term recommendations. The market appears to be in the usual soft spring season and caution should be exhibited with all moves. No need to take a full position yet. I did however, purchase both Barrick (ABX) & Research in Motion (RIM ) late this past week on the pullbacks. Good luck.  

 

 

Large Cap Stocks for Short & Long-term Gains

As noted in recent blogs over the past month, mid-late spring is historically not the best time to enter the market. As such, I’ve continually recommended caution and accumulating versus taking major positions in any stock. Defensive and income stocks were highlighted last week. Irrespective, there are still some potential quick and long-term gains based on calculated small moves. Some of these include the following stocks:

Energy: After a sizeable drop last week and into early this, a few major players have potential gains ahead. These are: Canadian Natural Resources (CNQ), Nexen (NXY), Suncor (SU) & Talisman (TLM). For income (and potential growth) watch Crescent Point (CPG) & Penn West (PWT).

Mining: Labrador Iron Ore Units (LIF.UN) & Teck Resources (TCK.B) and more speculative Grand Cache Coal (GCE).

Precious Metals: Agrium (AGU), Iamgold (IMG) & Silver Wheaton (SLW).

Agriculture: Agrium (AGU) & Potash (POT).

Industrials: Canadian National Rail (CNR) & Canadian Pacific (CP). For growth and income, watch Russel Metals (RUS).

Telecom: All 3 major Canadian companies appear headed for solid long-term growth: BCE, Rogers (RCI.B) & Telus (T).

Financials: All six major Canadian banks look strong: BMO, BNS, CM, NA, RY & TD. Also watch Sunlife (SLF).

Speculative owing to recent weakness: Research in Motion (RIM) & Yellow Media (YLO) offering over 13% in annual income.

Continue with caution. Keep plenty of reserves for opportunities (e.g. this past Monday). Good luck and happy holidays.

 

 

Conservative Income & Yield Selections Going Forward

The TSX/S&P dropped 2.9% this past week and year to date is now only up a meager 2.6%. With spring usually signaling market softness, maybe it’s time to reflect on some more conservative stock and bond picks for longer term growth and income ? Take a look at some of the following:

Preferred Shares: Top tier: Bombardier BBD.PR.C 6.538%, BBD.PR.D 6.125%, Brookfield Properties BPO.PR.L 6.436%, Canadian Western Bank CWB.PR.A 6.536%. 2^nd tier (all paying over or close to 5.9%): BPO.PR.N, + Bank/Financials: CM.PR.L & M, LB.PR.D, MFC.PR.D, NA.PR.O & P, PWF.PR.I.

Corporate Bonds: The benefit of corporate versus government bonds must be a substantially higher yield to offset lower security of the guarantee. In addition, long term bonds in general can be very dangerous as yields presumably will rise over the next few years thereby causing their prices to fall. In the mid-term category, Calloway Reit offers annual yields of 4.56% (Oct 2016) & 4.15% (June 2015). In short term category, Citigroup Financial 2.34% (Mar 2013) & 2.06% (Nov 2012), along with Riocan Reit 2.63% (Mar 2013) & 2.04% (Sep 2012). An anomaly worth considering for RSP’s is CIBC’s Strip Bond May 2014 paying 2.91%.

Dividend Paying Stocks: Many of the pipeline and real estate trusts (REIT’s) still offer reasonable 6% type yields. My favourite high paying dividend common stocks include the following: BCE (5.55%), Bank of Montreal (BMO) 4.52%, CIBC (CM) 4.22%, Crescent Point Energy (CPG) 6.34%, National Bank (NA) 3.46%, Pengrowth (PGF) 6.42%, Russel Metals (RUS) 4.24%, Telus (T) 4.28%, & TSX Group (X) 4.0%.

 

 

Large Cap Canadian Stocks Worth Accumulating

As highlighted in blog of last week, the market appears to be near a spring top and this provides for fewer opportunities for short term trading gains. Still, many of the stocks recommended last week for short to mid-term gains posted some very solid mid-week marks, only to shrink back down by week’s end.

These included: Agrium (AGU), Potash (POT), Canadian Natural Resources (CNQ), Suncor (SU), Canadian National Railway (CNR), Russel Metal (RUS), & Teck Resources (TCK.B). Longer Term Precious Metals Recommendations also performed well, including: Agnico Eagle (AEM), Barrick (ABX), Iamgold (IMG) & Silver Wheaton (SLW).

Recommendations Going Forward represent: Stocks in companies worth accumulating and not necessarily short term gains.

These include: Precious Metals: top pick Agnico Eagle (AEM). Metals: Russel (RUS) & top pick Teck (TCK.B). Financials: Bank of Montreal (BMO), Scotia Bank (BNS) and top pick National Bank (NA). Industrials: top pick Canadian National Railway (CNR). Energy: top picks Canadian Natural Resources (CNQ) & Suncor (SU). Income: BCE, Crescent Point Energy (CPG), Rogers (RCI.B), Telus (T), and all the other major banks.

Speculative Longer Term Recommendations include: Cameco (CCO), Silver Wheaton (SLW) – maybe wait for a pullback, and Research in Motion (RIM).

I recognize that most of the recommendations above represent stocks already and often highlighted. However, considering the frothiness of the market at present, it would be best to remain cautious and pick your spots. Continue Market Holding Pattern. Keep ample reserves on hand for opportunities.

Market Nearing Spring Top ?

With the market edging higher, there are less opportunities for picking stocks for quick trading profits. There are however, certain longer term potential gains available. Some of these would include the agriculture, energy and financial stocks. Precious metal stocks are often a 50-50 luck of the dice pick, irrespective that long term prospects for the price of gold look very promising. It’s in the interest of the US to maintain a weak dollar as it fuels export growth and makes debt repayment to foreign lenders less expensive. As such, gold and oil hold long term growth potential.

Short to mid-term stock recommendations include: (Agriculture) Agrium (AGU), Potash (POT) & Viterra (VT). (Energy) Canadian Natural Resources (CNQ) & Suncor (SU). (Financial) Bank of Montreal (BMO), Scotiabank (BNS), National Bank (NA), Royal (RY) & Toronto Dominion (TD).

Mid-to long term recommendations include: (Telecom) BCE, Rogers (RCI.B), Telus (T), (Industrial) Canadian National Railway (CNR) & Russel Metals (RUS), (Mining) Labrador Iron Ore Units (LIF.UN) & Teck Resources (TCK.B).

Speculative or more long term recommendations include: Agnico Eagle (AEM), Barrick (ABX), Cameco (CCO), Iamgold (IMG), Research in Motion (RIM) & Silver Wheaton (SLW).

Second tier recommendations include: CIBC (CM), Cenovus Energy (CVE), Nexen (NXY), & Talisman (TLM).

Market Hold Pattern for now. Good luck.  

 

Spring Has Sprung ?

The spring is usually a solid period for markets, however, don’t forget the old adage: “sell in May and come back in…”. Usually sometime in late spring the market weakens and moves sideways afterwards throughout the summer.

Certain sectors still look primed for upwards motion including: Agriculture, Energy, Financials, and Telecom.

Agriculture: Strong buy recommendations for Agrium (AGU), Potash (POT) & Viterra (VT). Potash has shown very strong technicals of late.

Energy: Canadian Natural Resources (CNQ), Suncor (SU), & Talisman (TLM). For value, look at Nexen (NXY) which suffered a strong decline this past week.

Financials: All the major Canadian Banks look strong. Bank of Montreal (BMO), Scotiabank (BNS) & Royal Bank (RY) still offer potentially strong upwards gains, while CIBC (CM), National Bank (NA) & Toronto Dominion (TD) have shown solid strength of late.

Telecom: BCE, Rogers (RCI.B) & Telus all appear poised for modest conservative growth with strong dividends. Rogers has shown improved stock performance recently and appears to be out of its technical slump.

Other Stocks displaying opportunities based upon both recent strength and weakness include: Canadian National Railway (CNR), Canadian Pacific (CP), Labrador Iron Ore Units (LIF.UN), Silver Wheaton (SLW), & Teck Resources (TCK.B).

Speculative Buys include: - based on recent weakness – Cameco (CCO) & Research in Motion (RIM) down 7% this past week. Good luck.

 

 

 

 

Rebuilding Japan

Over the past three weeks I have continually advised readers to be careful in the market. With the hopeful improvement of the crisis in Japan, it is presumed that companies involved in the material sector stand to benefit with the rebuilding efforts. The market appears to have settled down from the extreme turbulence of the past week in particular.

Recommended Stocks of blog last week (to be purchased with caution) increased on average 2.03% versus the TSX Composite of +0.84%. 17 of the recommended 22 increased in price.

Recommended Stocks Going Forward include: Materials sector: Teck Resources (TCK.B), Labrador Iron Ore Units (LIF.UN) and Russel Metals (RUS).

Energy is still a mid-long term buy including top producers: Canadian Natural Resources (CNQ), Suncor (SU) & Talisman (TLM).

Agriculture stocks have suffered some serious setbacks of late and could be poised for long term growth. Top 2 producers would be rated buys including Agrium (AGU) and Potash (POT).

Bank stocks have shown strength throughout the recent weeks and would be still considered to be Buy-Holds including: Scotia Bank (BNS), National (NA), Royal (RY) and Toronto Dominion (TD).

Speculative Buys include: Smaller copper producers including First Quantum (FM) & Lundin (LUN). Longer term very speculative stocks to watch include Cameco (CCO), Paladin (PDN) & Uranium Participation Units (U).

Could be a volatile week again in the market. Continue with caution but be open to opportunities. Don’t sell into weakness. Good luck.

 

Buyer Beware

 

Last blog (2 weeks ago) I repeatedly advised readers to reduce positions and await opportunities. With current uncertainty in Middle East politics and following the massive disaster in Japan, it’s still highly recommended to keep to the sidelines. Personally I reduced the majority of my stock positions with some handsome gains and most (but certainly not all) well above this week’s closing prices. These include: Bank of Montreal (BMO) $61.87 & $61.80 (closed $61.46), Canadian Natural Resources (CNQ) $48.97 & $49.00 ($45.15), Power Financial (PWF) $31.42 ($30.45), Research in Motion (RIM) $64.70 ($61.60), Royal Bank (RY) $56.69 (59.78), Talisman (TLM) $24.04 ($22.61), & Toronto Dominion (TD) $80.13 ($83.45). I also repurchased small positions in the following: Agnico Eagle (AEM) $67.86 ($64.95), Barrick (ABX) $51.16 ($49.40), Scotia Bank (BNS) $59.33 ($57.66), Canadian Natural Resources (CNQ) $45.08 ($45.15), & Potash (POT) $54.67 ($52.65).

Long Term Value Picks going forward include: BCE, Rogers (RCI.B), & Telus (T). The large banks have shown resilience in the face of recent pullbacks and should be held for now. Longer Term Buys in this category include: Scotia Bank (BNS), National (NA), Royal (RY) & Toronto Dominion (TD). A more speculative pick in this area for longer term appreciation is Sunlife (SLF).

Resource Stocks worth acquiring small positions include: Agnico Eagle (AEM), Agrium (AGU), Barrick (ABX), Canadian Natural Resources (CNQ), Cenovus (CVE), Goldcorp (G), Potash (POT), Suncor (SU) & Talisman (TLM).

Speculative Buys include: Athabaska Oil Sands (ATH) down 12.36% this week, Labrador Iron Ore Units (LIF.UN), Silver Wheaton (SLW) & Teck Resources (TCK.B). For income, keep watch on Crescent Point (CPG) & Vermillion (VET). Remain cautious as the markets can go either way but probably down further still. Good luck.

 

Market Showing Signs of Fatigue ?

Many large cap stocks ended the week unchanged or somewhat higher than the midweek dip indicated. This could be a warning sign that many sectors are headed for a retracement. The energy sector which has been particularly strong in recent weeks took a major hit mid week and one must be careful proceeding further. Could be a good time to take some profits and reduce positions awaiting a pullback as re-entry point. The few stocks in this category which still show some possible up-leg include Canadian Natural Resources (CNQ), Suncor (SU) & Talisman (TLM).

The precious metal sector has also been difficult to guess with stocks moving in different directions than both gold and the US dollar. Stocks showing further strength in this sector include Barrick (ABX), Goldcorp (G) & Iamgold (IMG).

Financials have been showing renewed life of late, most prominent being Scotia Bank (BNS), CIBC (CM), National (NA) & Toronto Dominion (TD). These can be considered holds. Royal (RY) would be deemed a long term accumulate. TSX Group (X) has come down over 10% since the announcement of the merger with the London Stock Exchange and would be considered a midterm buy.

Telecom Stocks worth still accumulating include BCE & Telus (T).

Speculative Buys (or “Purchase with Caution”) include Agrium (AGU), Potash (POT), Research in Motion (RIM), Silver Wheaton (SLW) & Teck Resources (TCK.B). These five stocks will do very well over the mid to long term but they might suffer further weakness beforehand. I did however purchase Agrium (AGU) this week at $90.03. After a hair raising journey down to $86.56, the stock ended the week at $92.69.

Long term recommendations on current weakness include: Kinross (K) and Rogers (RCI.B). Probably wise to lighten up and await opportunities.

The Continued Political Impact on Market Performance

The ongoing unrest in the Middle East will continue to provide for strong gains in the energy market. However, one should always note that natural gas producers would not necessarily be included in this list owing to abundance of reserves here in North America. Irrespective of cold winters, natural gas prices do not appear to be going anywhere for quite some time (at least in comparison to petroleum). Some big gains in top producers this past week include: Top value pick last week Nexen (NXY) +13.37%, Suncor (SU) +10.01% and both recommended last week Canadian Natural Resources (CNQ) +9.38% and Talisman (TLM) +8.89%. Low level Middle East unrest is always good for oil prices.

Precious metal stocks can also benefit from unstable political times however the rise in the US currency based on improved US economic forecasts can dampen this. Three of five stocks recommended last week increased substantially including: Barrick (ABX) +8.54%, Eldorado (ELD) +6.44% & Iamgold (IMG) +5.84%. Kinross (K) remained flat while top pick Agnico Eagle (AEM) dropped marginally by week’s end after having increased 4.6% by mid week.

Opportunities unfolding: Based on rumours of softening Chinese demand for grains, fertilizer stocks took a hit by week’s end after hitting new 52 week highs earlier. Agrium (AGU) which also announced a fire in one of their American plants dropped 4.46% for the week, while Potash (POT) lost 4.30%. Any rumours of decreases in Chinese demand for natural resources should be viewed as a rumour that should be capitalized upon. The continual influx of citizens moving from rural to urban areas and growth of the middle and wealthier class means that Chinese demand for building materials, energy and food stuffs will not diminish anytime in our lifetime. Teck Resources (TCK.B) has suffered two straight weeks of more than 6% losses and should be watched carefully for an entry point.  Often recommended in recent weeks, Research In Motion (RIM) received a strong buy rating and should be purchased on any weakness. Keep an eye on the political situation for buying opportunities.

 

A Market Dictated by Politics

The political events in Egypt can signal two possible market directions. Usually it would indicate that things calm down and energy and precious metal stocks fall back on the reassuring news while other sectors including financial, industrial and consumer move forward.. However, unique to this event is the possible spillover effect on other neighbouring countries which could only result in the opposite outcome if only temporarily. Monday should be a pivotal day in providing us with a better picture of the direction.

Market guru Jim Cramer of CNBC’s Mad Money predicted on Friday that gold will go much higher and should represent up to 20% of an individual portfolio. His top three picks in this area are Agnico Eagle (AEM), Barrick (ABX) & Eldorado (ELD). Agnico Eagle represents his (and my) favourite as it has lots of potential reserves coming to market from politically safe countries.

Hot Stocks usually remain hot: the following stocks hit 52 week highs on more than one occasion this past week. This would indicate their momentum strength going forward:  Agrium (AGU), Scotia Bank (BNS), Iamgold (IMG), Lululemon (LLL), National Bank (NA), Potash (POT), and TSX Group (X). However, both Iamgold and TSX Group dropped over 6% after hitting the last high so take heed.

Possible Value Plays include: Nexen (NXY) closed down 7.18% this past week, while Teck Resources (TCK.B) closed -6.12%. The telecoms were also down in weakness. Of particular note are BCE & Telus (T). Other stocks closing at the weekly low include: Canadian Natural Resources (CNQ), Eldorado (ELD), Kinross (K) & Talisman (TLM). Stocks closing near their weekly low include: Agnico Eagle (AEM), Barrick (ABX), & Iamgold (IMG). Best to wait for political events to decide which direction to take on energy and precious metal stocks.

Trades I made this Week include: I bought and sold Potash (POT) twice and Agrium (AGU) once for profit. I purchased Teck Resources (TCK.B) on weakness at $58.75 and $57.90 in two separate accounts. I sold a very large position in Research in Motion (RIM) at $66.75 after holding it since December and January for an average purchase price of $62.95. I bought and sold it again on Friday for profit and repurchased a small amount at $65.99. It closed at $65.88.

Keep an eye on the unfolding world political scenario before moving forward. Have a great week ahead and good luck.

 

Market Top or Inflection Point ?

After a strong week on the market for many sectors, one has to be wary whether the market leaders have recently gone up too much too fast. Leading stocks that hit new 52 week highs include: BCE, Telus (T), Scotia Bank (BNS), Industrial Alliance (IAG), Laurentian (LB), Toronto Dominion (TD), TSX Group (X), Cameco (CCO), Iamgold (IMG), Potash (POT), Viterra (VT), Canadian Natural Resources (CNQ), Cenovus (CVE), Imperial Oil (IMO), Suncor (SU), Bonavista (BNP), Baytex (BTE), Penn West (PWT), & Vermillion (VET).  

While the TSX Composite increased 2.6% this past week, since January 1^st it’s only up the same 2.6%. Many stock increases year-to-date or strictly as a result of this past week. Is this therefore a point where stocks continue upward or retrace some steps ? No one can answer that question so the best strategy is to watch carefully for any indication.

Hot Market Sectors year to Date include: Health (+13.4%), Technology (+11.6%), & Telecom (+5.5%).

Hot Stocks Year to Date include: Viterra (VT) +29.2%, Bombardier (BBD.B) +24.2%, Potash (POT) +16.0%, Penn West (PWT) +11.5%, Telus (T) +9.3%, Research in Motion (RIM) +8.5%.

Stocks to Watch this Week: Financials: Bank of Montreal (BMO), Scotia (BNS), Royal (RY) & Toronto Dominion (TD); Energy: Canadian Natural (CNQ), Nexen (NXY), Suncor (SU) & Talisman (TLM); Agriculture: Agrium (AGU), Potash (POT) & Viterra (VT), Mining: Agnico Eagle (AEM) & Teck (TCK.B).

Keep a sharp eye for potential dips or upward indications for buying/accumulating opportunities. Good luck.

 

 

 

Opportunities with Civil Unrest in the Middle East

Civil and political tensions are never good for the overall market and it appears that the unrest will continue indefinitely as other neighboring countries’ citizens decide to take advantage of the mood of the times. However, small individual events can trigger strong temporary upwards movements in the markets. It appears that sooner rather than later, the Egyptian president will be required to leave office. That event will trigger a big immediate and very temporary surge forward. In the meantime, there are certain sectors which one can profit with on short term moves. These are energy and to a lesser degree, precious metals.  

Short Term Energy Recommendations: Canadian Natural Resources (CNQ), & Talisman (TLM). In the secondary category, keep a watch on Encana (ECA), Nexen (NXY) & Suncor (SU) which also hit a new 52 week high on Friday. Other interesting stocks in the sector include:  Baytex (BTE), Cenovus (CVE) & Vermillion (VET). Baytex (BTE) also hit a new 52 week high on Friday while the other two stocks came very close.

Short Term Precious Metal Recommendations: Agnico Eagle (AEM), Barrick (ABX) & Goldcorp (G). Of secondary interest, Eldorado (ELD) & Iamgold (IMG).

Some stock trades I made this week follow upon my recommendations of last Sunday. Namely having seen agriculture giants pop out of the gate on Monday, I waited for a pullback on Tuesday to purchase Potash (POT) @ $163.10 and sell it on Thursday @ $174.99 (7.28% gain). It closed the week at $173.99. Similarly, I purchased on Tuesday Agrium (AGU) @ $85.47 and sold it on Thursday @ $89.99 (5.29% gain). I repurchased it on Friday @ $87.85 and it closed the week @ $88.02.  Two weeks ago I purchased Canadian Natural Resources (CNQ) @ $42.14. Friday’s closing price was $43.08.

Other Stocks to Watch include: Note that after hitting new 52 week highs on Friday, both Canadian National Rail (CNR) & Canadian Pacific (CP) came off quite dramatically particularly noting that they’re not traditionally volatile stocks. Viterra (VT) has been hot. Teck Resources (TCK.B) not so much but it can move quite rapidly on temporary good news. Both BCE & Telus (T) have been strong, each hitting new 52 week highs. Buy them on dips for income. Looks like another volatile week ahead. Good luck.

 

Opportunities Ahead

As noted in last week’s blog, as January goes, so usually goes the rest of the year. US markets are up for the year to date, reflecting renewed optimism in a rebound for the economy. Following this past week’s negative returns, particularly evidenced in the last 10 minutes of Friday’s trading, the TSX Composite is now in negative territory. However, I strongly presume that Canadian Large Cap Stocks will follow the US direction.

As recommended in last week’s blog, I personally bought on weakness Potash (POT) on Friday @ $160.85 and sold a little later and a few minutes before closing at $163.70. Moments later the stock closes at $159.77 ! That would indicate the strength of the late selloff. Many other market leaders closed at their daily or weekly lows usually indicating a weak opening Monday AM. This however could offer opportunities to pick up great stocks at lower prices.

This past week moves of interest include: After hitting a new 52 week high, Agrium (AGU) closed down for the week 6.13% and 8.55% below the new high. Potash (POT) also broke a new high yet closed the week down 6.89%. In a related sector, Viterra (VT) hit a new high and closed up 10.09%. Soft commodities are still therefore hot and this should lead one to believe that opportunities exist also in the late falling fertilizer sector. Certain energy stocks are also showing strong forward momentum including: Encana (ECA), Nexen (NXY) & Talisman (TLM) all three making strong gains for the week. Lastly note the weakening of some great financial stocks including: Bank of Montreal (BMO), Scotia (BNS), CIBC (CM), National Bank (NA) & Toronto Dominion (TD). CIBC (CM) lost 3.82% for the week. Research in Motion (RIM) closed at a weekly low losing 5.434% overall.

Growth Recommendations Going Forward: BUY ON WEAKNESS (!). Keep a close eye for an entry point on Agrium (AGU), Potash (POT) Teck Resources (TCK.B), Canadian Natural Resources (CNQ), Talisman (TLM), & Research in Motion (RIM).

Income Recommendations:  BCE, Telus (T), Bank of Montreal (BMO), CIBC (CM), Royal (RY) & TD.

Income with Immediate Growth Potential: Baytex (BTE), Bonavista (BNP), Crescent Point (CPG), Pengrowth (PGF). A good week to make money.

 

The January Effect

While last blog earlier this week focused on the stock performance over the past 52 weeks (19.55% gain), today I’ll review picks made on the last column in December 4 weeks ago. 4 of the 5 income/value picks increased in price for an average gain of 3.38%. Top gainers were TD (+5.50%) and Royal (RY) +5.22%. Only loser was BCE -0.92%. 6 of the 8 growth stocks increased in price for an average gain of 5.06%. Also six of the selections hit new 52 week highs during the period including Agrium (AGU), Canadian Natural Resources (CNQ), Labrador Iron Ore Units (LIF.UN), Potash (POT), Silver Wheaton (SLW) & Teck Resources (TCK.B). Top gainers were Potash (POT) +21.89% and Agrium (AGU) +11.24%. Top loser was Agnico Eagle (AEM) –10.33%.

In the portfolios I manage I purchased on several occasions: (1)  Bank of Montreal for an average purchase price of $57.56 (currently $59.53); Canadian Natural Resources (CNQ) for an average price of $41.69 (currently $41.53); (3) Research In Motion (RIM) for $61.67 (currently $64.18). Other stocks I purchased in late December well below their current closing price included: Agrium (AGU), BCE, Rogers (RCI.B), Royal (RY) & TD.

Stock Markets almost always perform well during the 3^rd year of a US presidential term and January is most often an indicator of the future year’s performance. As such it looks like it could be a strong year for the markets irrespective of the high US unemployment and weak housing market.

Longer term stock recommendations include value/income stocks: BCE, Rogers (RCI.B), Telus (T), Bank of Montreal (BMO), National (NA), Royal (RY), TD and ex-income trusts Arc Resources (ARX), Crescent Point Energy (CPG), Pengrowth (PGF) & Vermillion (VET). Growth recommendations going forward longer term (try to buy on dips) include: Agrium (AGU), Potash (POT), Canadian Natural Resources (CNQ), Labrador Iron Ore (LIF.UN), Potash (POT), Research In Motion (RIM), Suncor (SU), Talisman (TLM), & Teck Resources (TCK.B). It doesn’t look like precious metal stocks will be headed higher if the US economy improves however for more speculative recommendations, watch Agnico Eagle (AEM), Kinross (K) & Silver Wheaton (SLW). Good Luck.

Canadian Large Cap Stocks: Welcome to 2011

A brief mid-week blog to begin 2011. Looking back on top picks made exactly 1 year ago (Sunday January 10), 15 of 22 stocks selected increased for an unweighted average price gain of 15.19%. Combined with dividends, 17 of 22 stocks increased with the overall portfolio gaining 19.55%. Average dividend payout for the 22 stocks was 4.36%. Top performers not including dividends were: Teck Resources (TCK.B) +53.72%, Labrador Iron Ore Units (LIF.UN) +52.98%, Vermillion Energy (VET.UN) +34.94%, Penn West (PWT) +34.37%, Agrium (AGU) +30.89%, Potash (POT) +30.34%, BCE +27.81%, & Pengrowth (PGF) +25.71%. Top losers not including dividends were: Encana (ECA) -17.64%, Manulife (MFC) -15.82%, and Husky (HSE) -11.67%.

Going forward it appears that the US economy is improving and confidence in the markets is building. With China and Asia looking strong, demand for resources should remain relatively high. Keep an eye on energy, mining and agriculture. I recently purchased Canadian Natural Resources (CNQ) on weakness owing to a fire in one of their main coking plants. Strong growth recommendations on weakness include: Agrium (AGU), Labrador Iron Ore (LIF.UN), Potash (POT), Teck Resources (TCK.B), & Talisman (TLM). Income recommendations include BCE, Telus (T), Crescent Point Energy (CPG), and some banks including: Bank of Montreal (BMO), National Bank (NA), Royal Bank (RY) & Toronto Dominion (TD).

Speculative recommendation includes: Grande Cache Coal (GCE), Research In Motion (RIM) & TSX Group (X). Will follow up shortly and happy new year.