Ticker Take with Jon Erlichman
A weekly newsletter on investing.
What a week…
Well, a wild week…and a wild month! February was volatile and, depending on your portfolio makeup, painful period. If you’re optimist, you might lean on strategist Ryan Detrick’s data. He noted that the first quarter of a post-election year tends to be quite weak. “This choppy start to 2025 isn’t abnormal. Don’t panic.
25 stocks that could see their profits double?
If you’re searching for opportunities in this sell-off, our latest full-length investing video my interest you. We reviewed the 100 most valuable companies in the U.S. and found a quarter of those businesses are expected by Wall Street to see their corporate profits double or more in the next five years. Check out the video to see the list for yourself:
What’s next for Nvidia?
On a related note to that video, you’ve got a company like Nvidia that is still on track for massive profits in the years ahead. But the market response to its latest earnings was fairly rocky. A couple of Nvidia bulls shrugged it off. I spoke with Hatem Dhiab of Gerber Kawasaki Wealth, who remains extremely long the stock. Meanwhile, Dan Ives of Wedbush told me he still sees a $4 trillion market cap in Nvidia’s future. He believes $175 is a fair target price for the shares. David Burrows of Barometer Capital Management, meanwhile, has sold his. You can find out more about where David is investing now a bit later in the newsletter.
The truth about tariffs
We’re set up for another wild week ahead. But the impact on specific stocks is still open to debate. In Canada, for example, Bloomberg research notes that companies who ship physical goods and materials — outside of energy — to the US…actually make up a small portion of the TSX by market weight, which could limit the impact on the broader Canadian stock market.
And just because companies have cross-border operations doesn’t mean they are frequently shuffling their products back and forth. I spoke with the CEO of vitamin maker Jamieson Wellness, for example, who told me their US products are mainly distributed out of their American operations, while their Canadian products are made and distributed here.
By the way, which company in the S&P 500 has the most Canadian exposure? Costco. The retailer generated roughly 14% of its revenue from Canada last year, according to Bloomberg. But again, the cross-border impact is debatable, with Bloomberg noting that the retailer uses its domestic suppliers to stock its more than 100 warehouses in the country, as opposed to tapping into its American operations.
Why are we scared of corrections?
The S&P 500 has yet to correct, but it’s worth noting that declines are quite normal — even in bull markets. According to data from Ned Davis Research, a correction — which is defined by a drop of 10% or more without exceeding a 20% decline — has occurred every 1.1 years, going all the way back to 1928. Based on that average, this bull market has gone further than normal without a sizable pullback.
A possible trend to watch: tech pain and gold’s gain
As tech stocks have started to struggled, gold has been shining bright. And that is a divergence that long time investor David Burrows thinks will continue. David is with Barometer Capital Management and he noted to me that from 2002 to 2011, gold routinely outperformed the NASDAQ 100 index. But from 2011 to 2022…the NASDAQ 100 easily outperformed gold, which basically had no return. So, he sees it being an under-owned asset, despite its recent rally. In fact, he thinks gold’s steady advance is something that could go on for a decade.
Good gold stocks to own?
Sticking with David Burrows, he likes to follow the growth trends and he sees good signals continuing to come from the gold market. As such, his top choice is Agnico Eagle, while he also likes Alamos Gold as a good growth option. Beyond gold stocks, David is a fan of Fairfax Financial.
Best Canadian bank stocks to own?
It was a busy week for Canadian bank earnings. And the big players generally delivered respectable results, despite the growing uncertainty. I had a chance to sit down for a long conversation with Scott Thomson, Scotiabank’s CEO, who presented a fairly bullish case for his business in the face of the unknowns.
As for bank stocks to own, I asked a lot of folks for their take this week. Paul Harris of Harris Douglas Asset Management told me at the end of the day, he’d still like to own Royal Bank more than any other bank, just because of its size and scale.
Grant White, a Portfolio Manager with iA Private Wealth, told me he would lean towards the bank stocks with significant U.S. exposure, highlighting BMO and RBC.
Barry Schwartz, Chief Investment Officer and Portfolio Manager, at Baskin Wealth Management, once again re-iterated his approval of National Bank’s strategy when I spoke with him.
Best pharma stocks to own?
For Steve Scala, Senior Research Analyst at TD Securities, the best pharma stocks have to deliver the following:
1) strong pipeline dynamics
2) better than average top line growth and margin improvement
3) standout bottom line growth
With that said, Scala told me his top picks are AbbVie, AstraZeneca and Eli Lilly.
Will cannabis stocks make a comeback?
At a time when there is endless news coming out of Washington, cannabis stock investors are hungry to know when we’ll hear more about federal reform. I spoke with Trulieve CEO Kim Rivers, who remains hopeful it will eventually happen. In the meantime, she says her business continues to grow, which includes the launch of new drink products. As for frustrated shareholders, she acknowledges she is one of them, given her own stake in the company. But she’s keeping her head down and continuing to build. Of note, analysts who cover the company on average expect the stock to do well over the long run.
Popular picks in self-care?
I had a chat with Susan Anderson of Canaccord Genuity, who sees tailwinds over the next couple of years for self-care comapnies: an increased consumer focus on wellness, a shifting political view on healthcare that promotes affordable self-care and a growing emphasis on preventive health.
Her top picks? Kenvue, Prestige Consumer Healthcare and Perrigo.
The hunt for unloved stocks
I also had a good conversation with Tyler Ellegard of Gradient Investments, who singled out three names he thinks are worthy of more investor attention.
1) Dexcom — he thinks company has successfully re-aligned its salesforce
2) Coca-Cola Femsa - trades at a cheap valuation compared to Coca-Cola itself
3 Raytheon — despite headlines, defense spending doesn’t seem to be going down
Three small cap stocks that could offer big returns?
Meanwhile, I spoke with Sajan Bedi, Portfolio Manager at Canoe Financial, who noted that small cap stocks are trading at their lowest valuations relative to large caps in nearly 30 years. He says that has historically been a good time to re-examine small caps and three stocks he suggested were Finning (FTT TSX), Colliers (CIGI TSX) and Boyd Group (BYD TSX).
Finally, some bellwethers for your consideration
Will McGough, Director of Investments at Prime Capital Financial thinks it’s a good time to look beyond the biggest tech stocks and add some predictable bellwethers to one’s portfolio. He shared his top 8 picks with me: Procter & Gable, Goldman Sachs, JPMorgan, Visa, Johnson & Johnson, 3M, Nestle, and Linde.
As always, this is not financial advice. Good luck out there! Jon.
