You don’t get the nickname the “dean of valuation” by not having well-researched and considered opinions. This professor of finance believes that traditional valuation metrics don’t always apply to disruptive, fast-growing technology companies. Instead, he often looks at four other factors. Here are his views on four large technology companies and how to assess their future growth.
The third quarter isn’t done yet but we thought we’d get a head start on the fourth quarter. In this conversation John O’Connell, Chairman and CEO of Davis Rea Investment Counsel, and his colleague Zachary Curry, president at Davis Rea, analyze the prospects for stocks against the backdrop of the economy, earnings expectations, supply chain constraints, the Delta variant, and other factors. Here’s why investors need to broaden out their lenses to focus on the companies that will thrive the next three months and well into next year.
There’s been much debate about the impact of the Evergrande debt debacle unfolding in China. Will it lead to contagion in other markets or will it be contained and wind up being a one-off market event fed by some end of the world media headlines, and likely an excuse for some investors to take some profit? Thomas Lee, Head of Research at Fundstrat, has been relentlessly optimistic about stocks and relentlessly right for several years. Here are his four reasons why the major indices can continue to move higher and side step the Evergrande fallout.
Higher prices for goods and services started about 16 months ago. Consumers expect inflation to remain relatively high for the next few years. Prices for everything from groceries and natural gas to marine freight costs and uranium are surging. And the debate continues whether inflation will be transitory, as the Federal Reserve claims, or that higher prices will persist for a long time. So, we’ve turned to someone who’s studied inflation dynamics and economics in general for decades. J.J. Johnston, Executive Vice-President & Chief Strategist, Davis Rea Investment Counsel, draws on historical precedents, patterns and trends, and reams of data to make his determinations, and what they may mean for investors. Watch and listen to our conversation to learn the reasons why Johnston believes higher prices will not persist but how inflation could rear its head down the road.
While the S&P 500 is still within shouting distance of its all-time high, other indices and smaller capitalization companies have been declining beneath the surface of the market falling by as much as 20 per cent or more. Does that portend that large cap stocks must eventually follow? We don’t have the answer yet, but it’s something worth considering. Here’s some commentary, courtesy of CNBC, from strategists and a look at some of the deterioration we’ve already seen in the stock market.
There are so many things that we as investors think we know about the behaviour of stocks and the market in general. We’ve stored them as rigid assumptions based on our experience. But those assumptions can often be completely wrong. This year has proven that time and again and we still have more than three months to go. Here are some selected charts that investors may want to keep handy to remind them that just when you think you know something the opposite is often true.
We’re checking in with legendary billionaire investor Howard Marks to get his views on the current stock market, some timeless investing tips, his opinion on cryptocurrencies, and much more. Here, courtesy of Business Insider, are 12 of the best quotes from a recent We Study Billionaires podcast from the co-founder and Co-Chairman of Oaktree Capital Management, majority-controlled by Brookfield Asset Management.
Billionaires get that way for a reason. As the CEO of hedge fund Third Point, Dan Loeb makes the big calls in search of outsized returns for his investors and himself. One way he does that is to invest in early stage companies such as financial technology firm Upstart (NASDAQ:UPST), which went public last December. Loeb has outdone himself with this investment as Upstart has done nothing but increase in value when it was private and as a public company with the stock higher by about 870% since its IPO. Get more information on Loeb’s investment and why he has no plans to sell.
We love to monitor the blog of Chris Mayer, co-founder & Portfolio Manager at Woodlock House Family Capital, and author of 100-Baggers. In his latest post, Mayer explores the beauty of compound investing. Albert Einstein called compound interest the eighth wonder of the world. When applied to investing, it’s allowing the companies you own to reinvest earnings over and over again, and to let the stock grow unimpeded. Mayer lays out the compelling returns that can be achieved over time just by doing nothing, and dispels a myth about when to buy a stock.
What’s an investor to do in a stock market rife with greed, manias, and fraud? That’s a legitimate question even though it may smack of hyberbole. But investors have to play the market in front of them. So we sought out former hedge fund manager, former analyst at Bear Stearns, and, for the last 20 years, Founder, Editor & Publisher of the widely followed The Felder Report, Jesse Felder. He’s a value investor always on the lookout for undervalued assets. Felder combines his fundamental research with a top down macroeconomic view. He believes there are always opportunities for investors in any kind of market. Take advantage of Felder’s vast investment knowledge in this in-depth conversation to get his views on potential investments along with commentary on everything from the Fed’s biggest shift in 40 years to what he sees as an impending economic crisis.
Do you want to hear a sad story? About five years ago I was looking around for oversold stocks and came across a shipping company. I figured the stock was severely depressed, probably wasn’t going to zero, and would likely recover over time. So I put this company on my watch list. And that’s where it remains. Over that time, the shares went from about $6 a share to the current $24. Yup, I sat and watched a four-bagger and never pulled the trigger to buy the stock. I love when my instincts are right but not when my execution is terrible. Oh well. But the chance to own the right shipping stocks is not over because of pandemic-fuelled supply bottlenecks, and high shipping prices. Here are four ideas.
The S&P 500 has hit a record high 53 times this year with the broad index up about 20 per cent year-to-date. But what will September, historically the weakest month for stocks, and the rest of the year bring? “Equity markets are priced for perfection in a world that remains distinctly imperfect,” according to DataTrek co-founder Nicholas Colas. Here are seven risk factors that could upend the historic rally in the stock market for the remainder of the year and the likelihood of them occurring.
Keith McCullough says he tries to read a non-fictional book every 10 days. That’s because he’s always open to learning something that may add to his view of the world and how things work, especially when it comes to his macro investment process, which is always evolving. In part three of our conversation with the founder & CEO of Hedgeye, McCullough gives investors his top three investment books – one related to math, one to history, and one to behaviour – that, to this day, continue to shape how he invests. If you want to raise your investment game, consider these three book ideas from McCullough, who coaches investors daily on how to improve their investment results.
Groupthink can be a dangerous thing but when it comes to stocks it can be market beating. Goldman Sachs keeps track of the favourite stocks of a combined 1,386 hedge funds and mutual funds, which manage a combined $5.9 trillion. Since 2013 these “shared favourites” have outperformed the S&P 500. Here’s a list of the top nine current favourites along with some commentary and facts and figures from a Goldman Sachs report.
As the hazy days of August wind down giving way to more active traders back at their desks, get ready for an onslaught of “quick twitch” moves for stocks based on a myriad of blaring, often fear mongering headlines. Here’s the latest from John O’Connell, Chairman & CEO, Davis Rea Investment Counsel, on how to not get sucked into a game of musical chairs, and why investors should own businesses instead of renting them.
The phrase “The opera ain’t over till the fat lady sings” is usually attributed to late San Antonio sports writer and broadcaster Dan Cook. Although some believe a Texas Tech sports information officer coined the phrase. It’s a variation of the Yogi Berra expression, “The game isn’t over till it’s over.” The late New York Yankees’ Hall of Famer was also famous for malapropisms. No matter. In the case for stocks, based on record revenues and earnings, and a number of other factors, the opera ain’t over and the fat lady may not be warbling for a while.
A company’s business doesn’t have to be sexy to be lucrative for investors. High-flying technology firms are all well and good but a less than thrilling, old economy kind of company is perfectly fine, too. There’s no difference as long as the returns are stellar. That’s the case with 62 year-old Generac Holdings, which makes decidedly unsexy but much needed backup generators. The stock has surged more than 400% since the spring of last year. What’s intriguing about Generac now is its bid to be a player in the growing battery storage and solar industries after a couple of acquisitions. Here’s a concise look at Generac’s prospects.
Can we agree there’s no drabber colour than brown? But capitalize the b, add an ampersand and another Brown, and you’ve got Brown & Brown (NYSE:BRO), a slightly colourful, quiet yet highly successful and profitable, family-run company. B&B was brought to our attention in early February by Chris Mayer, co-founder & Portfolio Manager of Woodlock House Family Capital, and author of 100-Baggers. Shares of B&B are up a sprightly 32 per cent since then. Mayer gives us an update on the insurance company after it released its quarterly earnings a while ago.
It’s an often overlooked fact that, historically, dividends make up about a quarter to a third of annual equity returns. It’s an overlooked fact lately because price returns have been so go-go over the last 15 months or so. But, with interest rates remaining low and equity price returns expected to moderate, dividends are taking on increased importance, according to a recent report by the CIBC Equity Research team. Here are a few excerpts hi-lighting the sectors and companies that have been consistently growing their dividends the last 10-15 years.
Frank Holmes wears many hats and has big goals. We caught up with the interim CEO and Executive Chairman of HIVE Blockchain Technologies (TSXV:HIVE;NASDAQ:HVBT), the miner of Ethereum and Bitcoin. Holmes, also the CEO and CIO of U.S. Global Investors (NASDAQ;GROW), updates us on HIVE’s new NASDAQ listing, his goal to build HIVE to a $10 billion market cap, his goal to have HIVE trade virtually 24/7 like cryptocurrency does, the “G7 Cartel” and China crackdown on crypto, new equipment, revenue projections, why Bitcoin vs. Gold is a false debate, and much more.
We don’t mean to alarm you but we like to provide many varied opinions to arm you with as much information as possible in order that you can make informed investment decisions. Here’s some commentary we stumbled across from Graham Summers, Chief Market Strategist at Phoenix Capital Research, an independent investment research company. He uses three key market metrics to make the case stocks are in a bubble and the air is going to come out soon.
A combination of concerns – economic slowdown, Fed tapering of its bond buying, Delta variant, and China crackdown – have conspired to send stocks and commodities generally lower. Will this be a garden variety pullback and re-set or could it be the start of something more severe? Wells Fargo Investment Institute has released a State of the Markets report listing 10 current risks to the markets that could cause a correction – a drop on the major indices of more than 10 per cent. The Russell 2000 Small Cap index is already there. Here are the 10 risks to be watching.
This week, we present a special exclusive video giving you free access to the research process of the Investment Committee at Davis Rea Investment Counsel. We take you behind the scenes as John O’Connell and his team weigh the investment case for Zillow Group (NASDAQ:ZG). This pioneering nearly $25 billion real estate technology company has been compared to Google, Amazon, and Facebook, because it’s harvesting huge amounts of data and transforming the way people buy and sell homes. Zillow is disrupting an old industry, the more than $2 trillion real estate market, and is the largest destination on the web in the sector with more than 230 million visits per month. The data science firm also has information on more than 135 million homes in the U.S. Does the Davis Rea investment team, which invests thematically in companies with large addressable markets, believe Zillow is an excellent long-term investment? Find out and get rare exposure to years of investment management experience, insight, and expertise.
Here’s a stat for you. A dollar invested in U.S. mid-capitalization stocks in 1978 would be worth $199 today, more than a dollar invested in small caps or large caps. That’s according to an excellent summary of 11 top-rated mid-cap stocks, any one of which could provide stability and growth for your portfolio.