romanovadi1993

пятница, 1 мая 2020 г.

2 Cheap REITs: Value Investors’ Dream or Value Trap?

Since practically everyone has stopped going to work, ceased shopping, stopped going out for entertainment, REITs are suffering. Rents have been paused in an attempt to stabilize the economy. Unit prices of formerly popular names like H&R REIT (TSX:HR.UN) and RioCan REIT (TSX:REI.UN) are trading around or below their book values.

Are they a value investor’s dream?

If you like sniffing around for deals, Canadian REITs are likely to be a sector that will grab your attention. H&R and RioCan look pretty tempting at these levels. They have been absolutely slaughtered and have not recovered as quickly as other stocks.

Right now, H&R is trading at around $10, a far cry from its previously stable price of just over $20 a share. RioCan is not doing a whole lot better, currently trading at around $16 a share after having fallen from its relatively stable price of around $25 a share.

I’m going to skip price-to-earnings multiples at the moment, since it is pretty certain that earnings are going to fall into the toilet. I’ll instead focus on book value, which is a much more pertinent number at the moment considering much of the value of these companies comes from their intrinsic land values.

Currently, both companies are trading at huge discounts to their stated book values. RioCan trades at about 0.62 times its stated book value. H&R has an even more drastic discount, trading at about 0.42, or less than half, of its stated book value. These stocks are cheap according to this metric; there is no doubt.

Where’s the risk?

Much of the risk, in my opinion, comes from the book value itself. Earnings losses and the effect of a recession in Canada have been largely priced in already, so it is the value of the company’s assets that are in question.

Luckily, the good news is that many of the properties that the companies own are in large, urban centres such as Toronto. It is highly probable that these properties have a better chance to retain value over time. They also benefit from the fact that interest rates are likely to remain low, which lowers the cost of financing and might generally support real estate as an asset.

The problem is, what if real estate does fall sharply in the coming months and years? What if the global debt load, irrespective of insanely low interest rates, becomes unsustainable? The resulting cascade of debt defaults might push asset prices, including real estate values, lower. The book value of these companies could collapse with earnings, driving their stock prices even lower.

Distribution yield

One of the main reasons people buy REITs is for the steady income these companies generally provide. These companies are no exception, with current yields of 13.4% for H&R and 8.69% for RioCan. The yields are generous, but they are also more at risk of a cut than they ever have been before.

The pandemic is pretty much the worst thing that could have happened to these REITs. Even in a financial crisis, people can still go to buy things at a store. Right now, the doors are shuttered and offices are closed. There is literally no way to go out and buy much of anything, and the choice to go to work has been forcibly taken away.

Furthermore, after the crisis ends, who knows how much of the work-from-home mentality will remain. Maybe it will never return to pre-pandemic levels, leaving some offices shuttered for good.

The Foolish takeaway

In this article, I am neither recommending buying or staying away from these stocks. This is a bipolar choice, depending on your view of real estate and the economy going forwards. If you think real estate will hold its value over the next several years and possibly go up, these are screaming buys today. If you think real estate will go down and that there will be a permanent change in the working environment going forward, stay away.

Do not buy these as income stocks at this point in time. The dividends could stay in place or be cut. If you do buy, think of the yield as a bonus to a potential capital gain while you wait for a recovery.

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This Residential Landlord May Weather the COVID-19 Storm

From the looks of it, the COVID-19 pandemic will likely put the commercial real estate space in North America in a tough spot. However, it is unlikely that the residential real estate sector will go through a similar kind of pain, thanks to government stimulus efforts in the United States and Canada. These efforts should help the middle market resident demographic weather the crisis.

The federal governments in Canada and the United States are looking at several options to lessen the burden on the average resident. This includes wage replacement, expanded unemployment insurance, and small business loans tied to payroll protection.

Tricon Capital (TSX:TCN) is a residential real estate company primarily focused on rental housing in North America. Tricon has $8 billion in assets under management and approximately 32,000 single-family and multi-family rental units in its portfolio.

The company provided an update on its business and select operating metrics on April 16. From the looks of it, Tricon should manage to navigate itself out of COVID-19.

In its single-family rental business, Tricon achieved record same-home occupancy of 97% at the end of March. As of April 15, Tricon has collected over 90% of April rents. This represents 95% of historical collections at the same point. Less than 1% of single-family rental residents have requested a rent deferral plan because of economic hardship.

In the U.S. multi-family business, occupancy remained stable at 94% throughout the first quarter. As of April 15, Tricon had collected 92% of April rents. This represents 96% of historical collections at the same point. Approximately 3% of its multi-family rental residents have requested a rent deferral plan because of economic hardship.

Tricon has experience of a downturn

Tricon is a company that plays a defensive game and this is borne out of its experience in the 2008 global financial crisis. The company’s pure for-sale business model was in the eye of the storm and its existence was threatened. Over the next decade, Tricon transformed from an inherently cyclical business to a rental housing company that provides essential shelter to the workforce.

The average rent is between $1,200 to $1,500 per month for its U.S. operations. The household rent-to-income ratios are in the low 20% range which indicates the business is designed to perform relatively well across business cycles.

Tricon has temporarily paused acquisitions of single-family rental homes. These acquisitions might resume under stable macro conditions.

In its press release, the company stated, “Tricon has also paused the value-add capital expenditure program in its U.S. multi-family portfolio and other non-essential capital expenditures in its single-family rental portfolio to preserve liquidity and safeguard employees and contract workers.”

Tricon’s liquidity consists of a $500 million corporate credit facility. It also has $175 million of undrawn capacity as of March 31. Tricon also had approximately $53 million of cash on hand as of March 31, 2020, which brings liquidity to $228 million. This should be enough to weather the pandemic and get out relatively unscathed.

Tricon stock trades at $8.25. It has fallen 32% from its 52-week high, driving the forward yield to 3.4%. The company’s strong fundamentals coupled with the potential for capital appreciation makes it a winning bet right now.

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Brave Browser Brings Binance Integration to All Desktop Users

Privacy-focused web browser Brave has integrated the Binance widget into the latest stable release across all of its desktop offerings.

An announcement on April 30 notes that the widget is enabled by default, placing the Binance cryptocurrency exchange in front of all of the browser’s millions of desktop users.

Previously the widget was only available for testing in Brave Nightly and Beta versions.

Turn on, tune in, and trade out

Any user opening a new tab or window in the browser is clearly presented with the new Binance widget along with the Brave rewards widget on the right side of the page.

They are then prompted to connect the widget to their Binance account, and once authenticated can view their held assets and trade to their heart’s content.

As well as a summary of the assets held, users can buy cryptocurrency, deposit assets onto the exchange and convert between any asset supported.

Security built in

As the widget is built directly into the browser it preserves user privacy, and will only communicate with the Binance API through authenticated user interaction.

Users can easily disconnect the widget, preventing the browser from further interaction with their account unless it goes through the authentication process again. While the widget is enabled by default, those who wish to can manually hide it.

Coming to mobile versions later in the year

Brave browser currently has over 13.5 million active monthly users across all platforms. The Binance widget is currently integrated into all desktop versions of the software, for Windows, Mac and Linux operating systems.

It will be available for Brave’s mobile browser versions on Android and iOS later in the year.

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Dow 100,000 is Coming! 4 America 2.0 Stocks to Buy First

Editor’s Note: Paul here! Today you’re going to hear from my superstar Analyst Patrick Goodrich about one of my big America 2.0 predictions. Check out this video I posted to properly introduce you to Patrick. And keep reading for your HUGE opportunities in the Dow’s rise to 100,000 in America 2.0.

Story Highlights:

The Dow Jones is currently filled with many declining America 1.0 stocks you should avoid.
America 2.0 stocks will replace the dated companies and surge the Dow Jones to 100,000.
Paul Mampilly’s Dow prediction and two ways you can invest in America 2.0 stocks so you don’t miss out on this skyrocketing index.

“Well get the hammer! This piece doesn’t fit. Let’s pound it in.”

This is a classic dad joke my father likes to use when we’re putting together our annual puzzle during Christmas break.

We usually chuckle and ignore his request while we continue to find another piece in a sea of thousands that would fit.

It usually takes the entire two-week break to finish it, but it’s worth it in the end…

If we all liked the finished product — whether it be a medieval castle or mountainous landscape — we’d glue it, frame it and hang it up on the wall.

My favorite, the Mont-Saint-Michel, still hangs at my parent’s house.

A stock index, like the Dow Jones Industrial Average, is no different than a puzzle.

Each company in the index is like a piece of the puzzle, painting a picture of the strength of the overall economy.

Some fit and others don’t…

Currently, many Dow stocks don’t fit the America 2.0 picture.

But they are quickly being ushered out to make room for the new.

And you can invest in the companies that will replace the America 1.0 stocks and have the potential to push the Dow to 100,000 this decade!

The Dow’s New and Improved America 2.0 Puzzle Pieces

Since 1896 the Dow Jones Index surged from 30 to almost 30,000!

Yet it didn’t do that with the original 12 companies.

You see, the Dow has been a revolving door for new-world companies.

Today, the index holds 30 stocks. But more importantly, it’s swapped out old-world companies 54 times for new America 2.0 companies.

Each time it replaced a dated company and moved more towards America 2.0 stocks, the index surged higher.

Take a look at the explosive growth after every old-world eviction from the Dow:

Currently, companies like Exxon Mobil Corp., Chevron Corp., and Boeing Co. make up a few of the America 1.0 businesses in the Dow that are destined to be replaced by America 2.0 stocks.

These corporations will likely be pushed aside by companies like Tesla or Uber.

Take a look at this chart of Tesla (TSLA) and Exxon (XOM). You’ll see TSLA is about to sweep past XOM in market capitalization — the measure of what a company is worth.

Basically, that means investors are willing to pay more for TSLA than they are for XOM:

That should be no surprise for you!

Tesla is a Bold Profits favorite. And the market is finally catching up to what we’ve been saying.

In other words, the market sees value in Tesla. It’s at the forefront of electric vehicles, robotaxis, and cheaper, more efficient solar panels. Compared to Exxon, that supplies gas to costly internal combustion engines.

As TSLA’s market cap grows, it could take XOM’s place in the Dow Jones.

Since TSLA still has more growth and more innovation to go, I believe it could be one of the many America 2.0 stocks that will enter into the Dow and push it closer and closer to 100,000!

Get the Dow’s New America 2.0 Stocks Today

Now I can’t guarantee that TSLA will take XOM’s place, but what I will stand by is disruptive America 2.0 businesses — that make our lives easier and safer — will soar.

And that’s the main point … as the Dow moves up to 100,000, it’s important to invest in stocks that have the potential to change our lives for the better.

At the beginning of 2020 a study was done to figure out the top ten stocks millennials are excited about for the future … and TSLA definitely made the cut.

As you know, watching the millennial generation is one of our Bold Profits mega trends because they are the future of America 2.0.

And this news is why we’re #BOP (bullish, optimistic, and positive) for America 2.0 stocks.

Now is the time to position yourself in America 2.0 before it soars higher.

So here are the two best ways to ride the America 2.0 wave to Dow 100,000:

Check out Paul’s America 2.0 video update. In it, he’ll tell you more on how we’re going to get to Dow 100,000. This isn’t his first Dow prediction to come true. You’ll also see how to get The Blacklist — a list of 100 companies destined to go to zero and get pushed out of the Dow in America 2.0. Watch now.
Get your copy of Paul’s STUF report for the four best America 2.0 stocks to buy today. STUF is a rare glimpse at the Profits Unlimited STUF stocks represent the future — and three of them are helping push the Dow to 100,000. Read the STUF report here.

The America 2.0 puzzle will bring the Dow 100,000 picture to life. I know it’s a puzzle my family would be happy to hang on the wall.

We are ready for America 2.0!

How about you? Let me know your #BOP predictions for America 2.0. You can find me on Twitter @Pgoodrich6.

Happy investing,

Patrick Goodrich

Analyst, Bold Profits Publishing

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четверг, 30 апреля 2020 г.

Coronavirus Drives Mixed Results In Gold Demand In Q1

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Why This Canadian Value Stock Is a Screaming Buy

Value investing just can’t catch a break. The bull market — remember that? — was all about chasing upside. Value investors and contrarians were rubbing shoulders. Now comes the coronavirus, and not only is nobody rubbing shoulders anymore, but value investing is just as unpopular. But again, the contrarian thesis is strong here. There are a bunch of names that are simply reviled at the moment.

It makes sense that this should bring out the bargain hunters. And it has, to an extent. There have been rallies that have seen some beaten-up names recover. But these rallies have been short-lived and, for the most part, were the result of short-seller action combined with false hope. The markets are still looking for direction. And while rallies are reassuring, no recovery will be sustainable until there is a vaccine.

Indeed, the vaccine is the market crash backstop. But until a vaccine is developed, distributed, and proven to be effective, any market recovery will be shaky. That’s why value investors have some time on their hands to build positions in battered names at knock-down prices. This is no time to wait for the bottom before splurging on stocks. Instead, it’s time to start slowly feathering a TFSA or RRSP with bargains.

Upside versus downside in value stocks

Look at your entry points and try to figure out where you would like to start buying. It can help to look at analysts’ estimated price targets here. For instance, if you want to buy Cameco (TSX:CCO)(NYSE:CCJ), a good example that has more upside than downside, the name currently trades at its low target of $14 a share. A high target price of $18 would reel in around 30% upside.

Why else should Cameco be on your radar? Let’s examine the thesis for buying a uranium stock in the current market. Uranium is undervalued and has been for some time. The situation isn’t too dissimilar to the oil glut that tanked prices in the black gold. Except that uranium is far from free, is nowhere near to trading for negative dollars, and is not under threat from clean energy headwinds.

It’s quite the reverse, since uranium is a play for clean energy itself. Cameco is therefore a buy for any investor looking to divest oil shares. However, one of the reasons why uranium gets overlooked is the safety aspect. Ethical investors may be wary of swapping one risky sector for another.

The Fukushima disaster is not yet a distant memory, after all. Even the bullishness of Bill Gates on nuclear energy may not be enough to bring some investors around. But the thesis for gaining exposure to uranium is mounting. This trend will continue, as governments get on board amid a cratering hydrocarbon market.

The bottom line

Cameco is a particularly strong play as the markets begin to look for an alternative to the oil industry. Disorderly closure of oil networks will mean that, although cheap oil benefits the industries that use it, its actual production will become untenable. Investors should keep an eye on uranium as a source of green power upside.

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Retirement Income: 1 of the Best Stocks to Buy in May

One of the biggest challenges that many workers of our time are facing is how to build an income stream that could help them survive in retirement. With the COVID-19 pandemic and a recession that could follow, the saving environment has become more uncertain.

First, interest rates are likely to remain at the rock-bottom level for quite some time, as the central bank tries to help businesses and individuals get through this hard economic time.

That means GICs, saving accounts, and government bonds will continue to pay close to nothing on your savings. To make a meaningful contribution to your retirement goals, you have to invest in some of the best dividend stocks that yield more than the risk-free assets.

With this objective in mind, it makes sense for you to pick companies with durable competitive advantages, strong recurring cash flows, and a clear bias to return capital to investors in dividends and share-buyback plans.

Why utility stocks?

Utilities stocks fit nicely into this category. Utilities are considered some of the best defensive stocks, because these companies continue to pay dividends, even when markets take an ugly turn.

Many utilities, such as power and gas companies, pay regularly growing dividends, allowing their investors to earn a bond-like income, even if the share prices don’t appreciate much. With low interest rates making bonds themselves less attractive, utility stocks have become more attractive.

Adding the best dividend stocks and then continuing to buy more of them from your dividend income can still produce a powerful savings tool for you. That means you also need to get ready to add some risk to your portfolio, because investing in stocks isn’t as safe as buying GICs or putting money in your savings account.

How to manage risk

That being said, there are ways to manage your risk. You can do careful due diligence of the stocks you’re buying.

For example, you can find the best stocks that operate in a kind of oligopoly where competition is limited and the regulatory environment is very favourable for their growth, and they have a very established and diversified revenue base.

Similarly, you can also buy some energy infrastructure stocks, which provide electricity, gas, and other energy products to customers. Their rate of return is generally well defined, and the demand of their products is pretty consistent.

Due to this certainty in their cash flows, gas and power utilities and pipeline operators offer a good option to receive growing dividends. In this space, I particularly like Fortis (TSX:FTS)(NYSE:FTS).

Between 2006 and 2020, Fortis’s annual distribution increased from $0.67 to $1.91 a share — a very impressive track record of rewarding investors. The company has increased its dividend payout for 46 consecutive years — a record few companies can maintain.

Due to this strength, Fortis stock has proved to be one of the best bets in this recent market crash. After dipping initially, Fortis stock has recovered strongly during the past six weeks. Trading at $53.98, it’s hardly changed for the year when the benchmark index has fallen 13%. The stock pays $0.4775 quarterly dividend, yielding more than 3%.

Bottom line

Even in this low-rate environment, you can still earn a better return to improve your retirement income. In order to achieve that goal, you need a disciplined investment approach; buy some of the best dividend-paying stocks and hold them for a long time.