Rebecca Teltscher

Click here to see Lyle Stein on BNN Market Call for July 4, 2014.  On the American holiday, Lyle discusses his thoughts on the US economy and market. He believes the job numbers coming out of the US have been good and that the stock market has rebounded from the first quarter softness. Since interest rates are still at historical lows, he believes that people are looking for alternative places to put their money and that the stock market is the place to be at the moment. He says that US valuations are looking rich and that the Canadian market is looking better.

In terms of the 3 major Canadian segments, Energy has had a great run this year. Materials stocks are also starting to see improvements whether it be gold, base metals or commodities. And finally, the financial sector has good fundamental valuations. With the Canadian dollar rising as the price of oil rises, the Canadian market is a good place to be.

In terms of Lyle’s past picks from July 4, 2013, he chose Potash Corp (up 3.62%), Rogers Communication (up 9%) and Teck Resources (up 19.5%). Timing was off by about two weeks for the Potash purchase as the news of the cartel collapse in Russia drove the stock down by almost 30%. However, since the news was released last year, Potash has climbed back up steadily to $40 and Leon Frazer has been accumulating the stock on the way. Potash remains a good long term story as a cash generator and dividend grower. Rogers communication also suffered when Verizon was rumored to enter the Canadian market. However, Leon Frazer also accumulated stock during that time as the Canadian wireless business isn’t going anywhere and the telecommunications space remains a backbone of the economy. Teck resources performed the strongest as commodity prices began to rebound. The best time to get into a commodity stock is when the commodity price is so low that competitors are not able to add extra capacity at such depressed prices. Teck offers a good yield and significant optionality which makes the total return potential extremely attractive.

As for Lyle’s current picks, he chose Freehold Royalties, a stock with over 6.3% yield and a good balance sheet, Sunlife Financials, an insurance company that is attractively valued compared to banks with potential upside as interest rates rise and Teck Resources that has lots of flexibility to meet dividend and cap-ex needs.

For the full video replay, please click here.

lylestein

Lyle Stein, Managing Director, Leon Frazer & Associates

 

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