05 Jan 2017

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Canadian Portfolio Transactions

05 Jan 2017

Sells : 

Shaw Communications (SJR.B) – SPscore. Shaw’s SPscore dropped from 69% to 64% over the last 3 months, which made the company slide into 8th position of the S&P/TSX Comp. consumer discretionary stocks. Its intrinsic value has continually dropped in the last four quarters and is now close to a 4-year low. The TTM EVA is now at a 5-year low and also continually dropping since late 2015. Other factors to consider: Long term debt and shares outstanding are increasing, dividend payout ratio is now above 100%.

Intact Financial (IFC) – SPscore. Intact’s SPscore has also decreased over the recent months and is now at 63%, in 15th position of the S&P/TSX Comp. Financials stocks. IFC’s return on capital, even though still acceptable at 10%, has decreased since 2014 and is at a 5-year low. The intrinsic value has not shown a clear uptrend since 2014, but the stock is still trading at a 27% Future Growth Value premium, which is difficult to justify. The EVA is on a negative trend since March 2015, reflecting the company’s economic performance slowdown.

Buys :

Thomson Reuters (TRI) – In replacement of SJR.B. Thomson Reuters, ranked #3 within the S&P/TSX Comp. consumer discretionary stocks, was the highest SPscore available considering we already own #1 and 2 (MG, ECI). TRI’s intrinsic value shows a clear long term uptrend, and the stock trades at significant discounts both to its intrinsic value and Future Growth Value. The company generates good free cash flows, regularly increases its dividend with a healthy payout ratio and does share buybacks.

Sun Life Financial (SLF) – In replacement of IFC. Sun Life, ranked #3 within the S&P/TSX Comp. Financials stocks, was again the highest SPscore available considering we already own the #1 and 2 (HCG, CM). SLF offers everything we look for: a rising intrinsic value, return on capital, & EVA, trades at a discount, positive free cash flows. SLF’s dividend yield is also higher than IFC’s (3.2% Vs. 2.4%). We identified SLF as a potential buy in the blog a while back, in May 2016. At that time SLF and IFC ranked similarly, but SLF now clearly stands out.

To open the article from May 2016, please click here

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Sells :  - Shaw Communications (SJR.B) – SPscore. Shaw’s SPscore dropped from 69% to 64% over the last 3 months, which made t...

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Sells :  - Shaw Communications (SJR.B) – SPscore. Shaw’s SPscore dropped from 69% to 64% over the last 3 months, which made t...

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