четверг, 30 апреля 2020 г.
Why This Canadian Value Stock Is a Screaming Buy
Timor Invest
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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
Timor Invest
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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.
Canadian Stocks to Buy on the Cheap During the Market Crash
Many investors fear market crashes. However, long-term investors should embrace this crash, because bear markets can potentially allow you to make millions. So if you’re tired of reading about other people getting rich in the stock market, this might be a good day for you.
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Fool contributor Haris Anwar has no position in the stocks mentioned in this report.
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Famous Venezuelan Entertainer Quits Acting to Lead Controversial Crypto Startup
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Long-time Venezuelan actor and singer, Fernando Carrillo, has announced his retirement from acting. He has decided instead to venture into the crypto business. Starting May 1, Carrillo will become the CEO of Fight to Fame, though his role only extends to Mexico and the Latin American region.
According to an article published on April 29 by the Mexican newspaper, El Universal, Carrillo will lead the Singapore-based crypto firm founded by Morgan Shi. This company is known for issuing the FF Token.
Actor sees Blockchain as the “future”
Fernando, who is known for serial dramas such as “Siempre te amaré” and “Maria Isabel,” and films like “Pit Fighter” and “Gone Hollywood, “plans to get married and start a family, running his career in the world of cryptocurrencies.”
Carrillo spoke about the FF Token, praising its success in Asia. He also believes that the blockchain is the future. As such, he will be working to make the token a direct competitor from Bitcoin (BTC).
With regard to FF Tokens in the Mexican market, the actor commented:
“It is a world that I am getting to know, wonderful, just as you can win, you can lose. We are going to launch 40 million cryptocurrencies to the Mexican market, taking into account that we sold 37.5 million in Peru (…) Now we want to expand in Latin America.”
A fraud scheme?
The founder of Fight to Fame has been the subject of controversy in recent years. Some allegations claim that the company is a fraudulent scheme.
According to a Wall Street Journal report in 2019, Morgan Shi’s real name is “Shi Jianxiang,” who is a fugitive from Chinese authorities. He is accused of committing fraud and causing “trillions” of dollars to vanish.
Interpol issued a global wanted-persons notice against Shi in 2017 at the request of the Chinese government, who accused him of “crime of illegal fundraising by fraudulent means.” Despite the accusation, a spokeswoman for the FBI claimed not to have a warrant for Shi.
Carrillo’s defense on Shi
On the controversial reports on the legal status of Shi’s activities, Carrillo came to his defense:
“Morgan (Shi) lives in Los Angeles. Communist China persecuted many wealthy people to expropriate their wealth, but he was able to get out of there. If you search for his name on the internet, there will be some accusations that he is searched by Interpol, but it is a montage. Since working with him, he has been a righteous person, who has brought me knowledge, riches. I believe in what he’s doing.”
Cointelegraph reported in 2019 that former world boxing champion, Mike Tyson, refuted his involvement with Fight to Fame. The company was accused by the crypto research and analysis firm, Cointelligence, who called it a “total fraud.”
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30 Million Unemployed; Tesla Cries Freedom; Microsoft Goes Hard
Timor Invest
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On the Turning Away…
…from the pale and downtrodden … and the words that they say which we don’t understand.
Wall Street almost — almost — became aware of the U.S. economy this morning.
Continuing the epic U.S. employment saga, the Labor Department put another brick in the unemployment wall this morning. Some 3.8 million Americans filed for first-time unemployment benefits last week.
The six-week total now stands at 30.3 million unemployed. CNBC called it “the worst employment crisis in U.S. history.”
The market opened down nearly 2% on the news, and, for a brief moment, you could see the sweat on Wall Street’s brow. A hint that somewhere in that sea of frothing bullishness, someone almost had an epiphany. A realization that economic demand might suffer considerably due to 30 million unemployed American consumers.
And then, while contemplating how waning demand might impact a U.S. economic recovery and corporate bottom lines, that someone stumbled over a pile of Fed money (It’s a gas!) and completely forgot the whole deal…
The Takeaway:
Hey you!
Are you still learning to fly in this crazy market? Or are you sitting back comfortably numb and enjoying the quarantine?
Yes, the economic data makes you want to run like hell, but you don’t have to say “goodbye blue sky” to investing in this market. Just breathe, be patient and take your time. Otherwise, your portfolio will play that great gig in the sky.
When it comes to investing, it’s hard to remove yourself from the “us and them” mentality, especially during these trying times. But giving in to emotions will eventually bankrupt you one of these days.
Yes, by all economic accounts, the market is more irrational than Roger Waters on a nicotine and whiskey bender. But you can be right and still lose money.
Now, Great Stuff has been pretty down on the market’s prospects since this whole pandemic thing started. We recommended putting most of your investment capital in gold, bonds and cash … you know, the standard safe havens. (By the way, which one’s Pink?)
But there’s one sector in which we have high hopes: tech.
No, we don’t have brain damage. We’re just reading the writing on the wall. Today, Great Stuff takes a look at three Big Tech companies post earnings, and we weigh their potential in the current market.
It’s our way of helping you shine on, you crazy diamond!
So, what’s … uh, the deal? Where can I grab that cash with both hands and make a stash?
Why, be careful with that ax, Eugene! If you’re wanting more, then it’s time to turn your tech investing into interstellar overdrive. See, nobody stays as fearless in the tech game as Paul Mampilly. And Paul just found one tech stock that’s set to transform the way we use and create energy.
Paul even said: “This technology can single-handedly power a major American city … virtually free of charge.” So, let there be more light! And as the market’s seesaw continues, and the Fed’s jugband blues carries on, find out more about the one tech stock that Paul recommends you buy now.
Good: Freedooooom!
Did you miss crazy Elon Musk? I did.
The Tesla Inc. (Nasdaq: TSLA) CEO proffered up his best Rage Against the Machine impression yesterday, crying out “Freedom!” and calling the COVID-19 response in the U.S. “fascist.”
The outburst came during Tesla’s earnings call with investors … earnings, yeah right!
Speaking of earnings, Tesla posted a surprise profit. Doesn’t that make it three in a row?
Why yes … yes, it does. And that’s a good thing for Tesla investors in the wake of Musk coming a bit unhinged. The company posted a first-quarter profit of $1.24 per share, shocking analysts who expected a loss. Revenue also topped expectations, coming in at $6.2 billion.
While Tesla remained cautious in its outlook due to the pandemic, investors seized on the unexpected profit and better margins — a notable feat given Tesla’s lower production volume.
Our take at Great Stuff is that Tesla is a solid long-term investment. However, given our reservations about the overall market and the U.S. economy, now may not be the best time to chase TSLA shares. If you’re looking to invest, be patient. Wait for a pullback, and time your entry accordingly.
Better: Sign, Sign, Everywhere a Sign
Do this. Don’t do that. Can’t you read the signs?
Facebook Inc. (Nasdaq: FB) is in rally mode today. The company has seen the sign, and it’s opened up investors’ eyes. (A Tesla cover into and Ace of Base reference? Are you trying to give us whiplash?)
What sign? Why the most important sign of all for Facebook: stability in ad trends.
Forget that Facebook blew past Wall Street’s first-quarter earnings expectations, or that revenue of $17.74 billion rose 17% to beat the consensus target of $17.53 billion. It’s all about guidance in this market.
“After the initial steep decrease in advertising revenue in March, we have seen signs of stability reflected in the first three weeks of April,” Facebook said in its conference call with investors.
That’s all the sign that FB bulls needed to send the stock skipping more than 5% higher.
So, what’s our take on Facebook? Well, setting aside our distaste for the company’s mishandling of user data and its unwillingness to fully address misleading posts … FB is the best social media stock on the market.
It’s a dual-edged sword. FB is a solid investment choice if you can set aside your emotions on the company.
Best: Good Ol’ Softy
Microsoft Corp. (Nasdaq: MSFT) is probably one of our favorite tech stocks here at Great Stuff. While we haven’t made it an official pick for the Great Stuff free portfolio, you should probably pick up a few shares if you can.
Why? Because of statements like this: “COVID-19 had minimal net impact on the total company revenue.”
Fact: MSFT was the only Dow stock to gain in the first quarter.
While practically every other company in the U.S. issues warnings and pulls forecasts, Microsoft is plowing ahead. The company just reported fiscal third-quarter results, beating even pre-virus estimates.
Driving that performance was an impressive 59% spike in Azure sales. Azure is Microsoft’s “Intelligent Cloud” business, and it’s eating Amazon Web Services’ lunch with JEDI-like prowess.
Finally, Microsoft actually provided fourth-quarter guidance — one of the very few companies to do so this earnings season. The company expects revenue of $35.85 billion to $36.8 billion, largely in-line with Wall Street’s targets.
The thing is, Microsoft has been an essential company for decades. It’s weathered dot-com busts, financial crises and government antitrust lawsuits. In fact, when I hear that “buy and hold” is dead, I always point to Microsoft.
You spoke to me, and now it’s time to breathe in the air.
Mr. Great Stuff, how long are you keeping this Pink Floyd thing going?
One of these days … one of these days I’ll stop speaking in song lyrics. But until then, you can count on Great Stuff to get countless eclectic earworms stuck in your head.
Meanwhile, if you’ve been hanging on in quiet desperation for this week’s Reader Feedback, wait no longer! It’s that time again, so let’s see what Great Stuff readers are thinking about this week.
Bye-Cycles
I feel like the stock market has three things going against that people don’t talk about but I’m not sure if they even really matter.
- “Sell in may and go away”
- We are at a serious technical resistance for SPY.
- We are at the end of the month and we tend to see people selling more at the end of the month as opposed to the beginning … right?
I have also read that we Tuesdays tend to be more bearish than other days of the week.
I am thinking that since we didn’t see much of a sell-off on Tuesday, no one is talking about ‘sell in May,’ and we aren’t really seeing a sell-off due to resistance or it being the end of the month … the fed is going to win and we are going to plow through resistance and the recovery will continue. Does what I’m thinking make any sense?
— Preston B.
My, my … someone’s been reading his Chad Shoop! (For anyone guessing: Chad focuses on investing around many of these market cycles — as well as some hidden market cycles too. Details here!)
Thank you for your thorough email, Preston. I wanted to touch on just a few of your questions today, but honestly, you already answered it yourself in the first line. Here’s the lowdown:
Yes, we often see a seasonal dip in May. Yes, the end of the month often brings a flurry of Big Money rebalancing and profit taking. Resistance … why, up until today’s market dive, it seemed like the S&P 500 Index had the rearview mirror torn off like it was in a Jo Dee Messina song.
All of these are true to their own extents. Yes. But somewhere along the line, Mr. Market declared that fundamentals and technical logic are dead, instead deciding to leap headfirst into the chasm of “fear of missing out” uncertainties.
Preston, your observations are most astute. In normal market climates, those trends are what we’d talk about this week instead. But today, as things are right this instant, I mostly agree with your statement at the top: “I’m not sure if they even really matter.”
Just Like Starting Over
Yo, Joe,
Well, I tried. That’s about all the slang I know. I am the newest of the newbies, have never placed an order. … How can I go find a broker when I have to stay inside? How can I get my monies out of banks into brokers’ hands? Is that all done electronically? Help!
— Janis W.
Yo, J.W.! What’s good, homie? You keeping things 100 during quarantine?
Let’s help you get that bread — err, a brokerage account to start with. Your hunch is right: Almost all brokerage action is done electronically these days, as is moving money into your account once it’s set up.
I know that many people are put off investing entirely because it’s mostly online. But once you get started with a broker you like and trust, I’m sure you’ll appreciate the convenience — and the possible addiction of checking on your stocks every second of the trading day (which, frankly, is a stage most new investors get through sooner or later).
Before we go any further, let me just say that Banyan Hill doesn’t have any personal or business relationship with any of these services. They’re just the top choices I see among many of our readers.
Check out some of these links below and see what broker is right for you. You’ll want a trading platform that’s easy to use and gives you the information you want without having to sift through a bajillion different web pages:
I also want to add that, just like starting any kind of account where money is concerned, there will be fine print. (There’s always fine print, right? It’s like the ever-returning pocket lint of the legal world.)
I wish you the best of luck, Janis!
I Am You, and What I See Is Me
Are you still ok with your advice to buy Starbucks put options?
— Philip H.
Philip, I … I don’t think that was my recommendation. By any chance, are you thinking of this Winning Investor Daily article by John Ross back on April 10? Hey now, us Joes and Johns aren’t interchangeable, you see…
So, while I can’t give you personalized investment advice here (legal beagles and whatnot), what I can say is that, when it comes to options … you definitely want to keep any losses short and take gains when you’ve got ‘em.
Options Land is a fast-moving (yet insanely profitable) place … and you might want to ask John Ross directly for your next move, Philip. For everyone else out there looking for a spot to jump into the options game (and trust me, there’s no better time to do so), you can get started with expert John Ross right here.
That’s a wrap for today, but if you still crave more Great Stuff, check us out on social media: Facebook and Twitter.
Until next time, be Great!
Regards,
Joseph Hargett
Editor, Great Stuff
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Turn Junk Into Profits With This Recession-Proof Stock
Timor Invest
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You’ve heard the media tell you for years that the U.S. is a consumer-driven economy. They’re right.
And the U.S. consumer is in trouble today…
More than 30 million people filed initial jobless claims in the last six weeks.
Today’s real unemployment rate is more than 20%. That’s the highest level since the Great Depression.
But that’s only part of it— Mark Zandi of Moody’s Analytics says the actual rate is higher.
Some people can’t look for a job right now, for example those who are sick. This rate doesn’t account for them.
Not working affects every segment of our consumer-driven economy.
Consider cars. Automakers just reported a plunge in new-vehicle sales in March.
Auto sales fell 37% from the prior year. Shelter-in-place orders kept customers from dealerships.
It doesn’t matter if dealers are offering 0% interest rates if consumers don’t have any income. And unemployment checks don’t count in the eyes of lenders.
So, many automakers are in trouble.
If you’re looking to invest in the auto space, I have an idea that may not have crossed your mind. But it should.
It has sold off due to the virus, but it’s in demand today…
Seek Consistent Gains in an Unexpected Place
This company’s sales grew every year it’s been public. That includes the financial crisis.
It’s risen by 25% annually over the last 16 years, from $329 million to $12.5 billion.
We love to see that kind of consistency.
What kind of business am I referring to, you ask?
Junkyards.
Hear me out…
LKQ Corp. (Nasdaq: LKQ) is a global junkyard company, though it describes itself as a “leading provider of alternative and specialty parts to repair and accessorize automobiles.” (Po-ta-to, po-tah-to…)
LKQ owns 1,700 locations in 31 countries. It operates under a variety of brand names in the U.S., Canada, Europe and India.
Fewer people are working today, but they’ll still have to get around when governments lift restrictions. And if they don’t live in a big city, they’ll need a car to do it.
Some in a big city will, too, depending on where they need to go.
If your car isn’t working and you can’t afford a new one, you have to fix it. That’s where LKQ comes in.
Buying Junk Has Never Been Easier
LKQ owns and operates junkyards full of cars and car parts.
The word “junk” sounds bad, but these cars have some solid parts in them. Parts that you or your mechanic can use to fix your car.
And LKQ offers tools to make the process easy for you.
It groups cars into sections: domestics, imports, small trucks, etc.
And there’s an app. Before you even visit, you can see what vehicles they have there.
You can even set alerts so they notify you when a car arrives that meets your specs. Then you can see pictures of the interior, exterior and engine of every car.
When you arrive, you can go directly to the car you’re seeking based on LKQ’s numbering system.
It even offers sales — for certain parts and for everything on the lot — on different days.
LKQ makes it easy to find what you’re looking for. And the junkyards I’ve seen are well maintained.
LKQ Shares Are Inexpensive … but Not for Long
LKQ’s services are in demand. But we still don’t want to pay too much for the stock.
Fortunately, it’s cheap on most metrics.
LKQ has been trading since 2003. Since then, its average price-to-earnings ratio (P/E) is 25.
Today, it’s less than 12. If it returns just to the midpoint, shares would double from here.
And that’s not all. It’s cheap per various multiples:
LKQ’s Price Is Way Too Low Right Now
Things are tough for the consumer today. You don’t need me to tell you that.
But we can profit from names that will benefit.
I recommend that you look into the shares of LKQ today. It has some huge upsides at these levels.
Good investing,
Editor, Profit Line
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1 Top Canadian REIT to Buy Today and Beat COVID-19
Timor Invest
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TSX-listed Canadian REITs have been among the stocks worst affected by the coronavirus pandemic. BMO Equal Weight REITs Index ETF, which seeks to mirror the performance of an equal weight Canadian REITs index, has lost 20% since the start of 2020. It is Canadian retail and hotel REITs that have been among the most harshly impacted.
Northwest Healthcare Properties (TSX:NWH.UN), which is a top-10 holding in the BMO Equal Weight REIT ETF, has been roughly handled by the market, losing 18%. This has created an opportunity to acquire a high-quality REIT at an extremely attractive valuation. Northwest Healthcare is the ideal Canadian REIT to own during such a challenging economic environment.
Solid fundamentals
An important characteristic that is a top consideration when buying stocks in an extremely uncertain environment is whether they possess strong fundamentals. Northwest Healthcare’s 2019 results highlight the strength of its operational and financial position.
It finished last year with an impressive occupancy rate of 97.3% and a weighted average lease expiry of a notable 13.8 years. Northwest Healthcare finished the year with a solid balance sheet, as evident from its debt-to-gross book value ratio of 49.6%.
That emphasizes the certainty of Northwest Healthcare’s earnings.
The REIT is also in the process of selling non-core assets in Australia and Europe, which will boost its cash holdings by around $237 million. Northwest expects to generate another $181 million in net proceeds from asset sales during the second quarter 2020.
The REIT is also successfully refinancing its near-term debt, further strengthening its financial position.
Those characteristics will ensure that Northwest Healthcare will emerge from the current crisis in solid shape.
Defensive credentials
Northwest Healthcare’s solid fundamentals are enhanced by its considerable defensive characteristics. It invests in real estate, which, as hard asset over the long term, has proven resistant to economic slumps.
Northwest Healthcare’s assets are specialist properties for the medical industry, notably hospitals, clinics, and associated facilities. Demand for healthcare is inelastic and, in many developed countries, has been growing at a steady clip because of aging populations. That will ensure the utilization of Northwest Healthcare’s properties remains high, further protecting its earnings.
Healthcare has been one of the few economic sectors to benefit from the coronavirus pandemic. While that shouldn’t be a key consideration for buying Northwest Healthcare, it is worth noting.
Northwest Healthcare also boasts a wide economic moat, because of steep barriers to entry and the considerable regulation of healthcare services. That protects it from competition and further protects the REIT’s earnings, even during economic downturns.
Considerable growth ahead
During 2019 and early 2020, Northwest Healthcare completed a series of acquisitions. These included the $1.2 billion purchase of 11 freehold hospital properties in Australia and $167 million of U.K. hospital real estate. This positions Northwest Healthcare to profit from growing demand for medical services and aging population in both countries.
Those deals, along with Northwest Healthcare’s initiatives on unlocking synergies and developing core properties, will give earnings a solid boost.
Foolish takeaway
Northwest Healthcare possesses solid defensive attributes, which will shield it from the worst of the economic fallout from the coronavirus. That, and with Northwest Healthcare trading at a 30% discount net asset value, highlights why now is the time to buy. The REIT’s appeal as an investment is enhanced by its regular distribution, which is currently yielding juicy 8%.
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Market Rally Warning: Another Crash Could Take Us Back to March Lows
Timor Invest
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With stocks in “market rally” mode after the vicious coronavirus-induced market crash, many investors are buying back into stocks.
Don’t go all-in on this market rally
The worst of the pandemic may be in the rear-view mirror. However, investors must resist the urge to chase this market. As we learn more about the damage done to the economy by the lockdown, we can’t forget the possibility of another market crash.
Whether or not the stock market makes a return to March lows is anyone’s guess. I don’t think it will, but it could. Investors would be wise to be prepared for anything. That means maintaining an adequate liquidity position and spreading out your buying activity. Avoid going all-in on the expectation that this is a V-shaped market rally.
Do scoop up the stocks that you know to be undervalued if you’ve got the financial wiggle room. We’re in a stock-picker’s market right now. COVID-19 has rendered many segments of the market speculative or even downright un-investible. For self-guided investors who can pick their spots, there’s a great deal of outperformance to be had. The recent collapse in oil prices has weighed heavily on the TSX index.
There’s still a tonne of risk out there amid this market rally — manage it by picking your spots carefully
Mad Money host Jim Cramer thinks that investors should forget about index funds, which mix many good stocks with the toxic ones. He thinks investors should embrace buying shares of individual companies. I think he’s right on the money and would urge passive investors to dip their toes into stock picking. There’s never been a better time to do so after the post-crash market rally.
As a stock picker, you can avoid stocks in industries that are clouded by uncertainty. The TSX index gives passive investors overexposure to the most vulnerable sectors. Should the markets reverse, the TSX index could get obliterated. But if you pick your spots carefully, you can at least limit your downside relative to the broader indexes.
Consider shares of Jamieson Wellness (TSX:JWEL), a health and consumer staple play that recently surged to make new all-time highs amid the pandemic. I have pounded the table on the stock, praising the company for its defensive growth traits. I think these will allow the highly underrated company to continue faring well in the face of a recession.
Main Street is just starting to pay attention to Jamieson following its incredible 85% rally over the past year. What entices me most about Jamieson is the fact that it’s riding on the back of a secular tailwind, making the seemingly boring vitamin-maker one of the most exciting low-tech growth stocks out there for the long haul.
Jamieson is a Canadian IPO success story. As the name continues to experience stable (or even increased) demand for its vitamins, minerals, and supplements through this pandemic, I suspect the stock could have a heck of a lot more upside over the coming months, regardless of whether this market rally holds.
Foolish takeaway
You don’t need to be a “professional” money manager to limit your damages should this market rally be in for a sudden reversal. Embrace the self-guided investor journey and pick your spots to avoid the riskiest areas of the market.
Stay hungry. Stay Foolish.
Canadian Stocks to Buy on the Cheap During the Market Crash
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Fool contributor Joey Frenette has no position in any of the stocks mentioned.
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Bitcoin Doubles Gold’s YTD Rate of Return in 1 Day as Gains Top 27%
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Bitcoin (BTC) hitting almost $9,500 on April 30 was a boon for cryptocurrency investors — but gold bugs were left holding the buck.
As BTC/USD climbed to eight-week highs on Wednesday, the pair’s already handsome year-to-date returns began outshining its last major competitor — gold.
Schiff blames speculators as BTC launches
As Cointelegraph reported while prices aimed for $9,000, gold was still the best bet year to date. Now, however, Bitcoin has obliterated the precious metal’s rate of return.
Topping out at $9,440 on Thursday, BTC doubled gold’s 13.1% rate of return in less than 24 hours.
The surprising achievement means that out of a basket of macro assets, Bitcoin is now the easy winner — stocks, gold, the dollar, and crisis-hit oil have been left in the dust, data from monitoring resource Skew confirms.
Macro asset current year returns summary. Source: Skew
Reacting to events, notorious gold defender Peter Schiff was unimpressed — but not with gold.
“Bitcoin is being bid up by speculators, just like other risk assets today,” he claimed on Twitter.
#Bitcoin and #gold have nothing in common, so there is nothing confusing about today’s price movements.
A $0 prediction too far?
As Cointelegraph mentioned earlier on Thursday, it was the exchanges that saw volume spikes overnight, rather than speculative arenas such as Bitcoin futures, which still have lower volume than before prices crashed in March.
Schiff is well known for his doomsday Bitcoin predictions, often claiming that the market will head to zero. Retaliating after his latest comments, Lightning Torch organizer Hodlonaut took him to task.
He tweeted:
I’m confused why you said it would drop 50% more on March 13th, and now it’s up 70% instead. Pls explain.
Schiff was arguably correct in describing gold and Bitcoin as essentially different. At its core, Bitcoin represents absolute scarcity, something which humanity has never had before.
As “The Bitcoin Standard” author Saifedean Ammous and others note, gold is not rare at all by comparison, and its supply is regulated only by the amount of time that humans can devote to mining it.
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15 Stocks to SELL for a Strong America 2.0 Portfolio
Timor Invest
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Choices.
Some are as easy as clearing out the faded cardigan in your closet for the new cashmere you just bought.
Others are a little more tricky.
Like the stocks to fill your investment portfolio with.
Not to worry. That’s why we’re here to help!
And I’m going to help you narrow down the choices in part two of our Bold Profits series “How to Build Your America 2.0 Stock Portfolio.”
In fact, I’ll tell you 15 stocks that you can trade in for one stellar America 2.0 exchange-traded fund (ETF) today.
As I mentioned in “Part 1” of this series, to build the strongest America 2.0 investment portfolio, you have to follow three important steps: preparation, choice and maintenance.
This week, your next step is making the choice to weed out troubled America 1.0 companies.
I’ve identified 15 stocks that are likely to cut their dividends — a sign of a fading America 1.0 company.
And specifically, ones you should blacklist now and clear out of your America 2.0 structure portfolio to lock in the biggest gains this year.
15 Blacklist Companies Slashed Their Dividends — Sell Now
Here are the companies that made the America 2.0 Blacklist:
These 15 companies personify America 1.0.
Remember: America 1.0 publicly traded companies feature one or more the following financial characteristics:
- Declining sales over the past three to five years.
- Buying back stock and lifting dividends, despite having a declining business, as seen by declining sales.
- Borrowing money, and if sales are declining, is effectively borrowing to buy back stock and pay dividends.
- Buying a high-growth company, at an irrational evaluation, that has no real attempt to change its underlying business.
- Facing technological obsolescence.
- Losing market shares to new companies because their brands are falling out of favor or their product or service is considered out of touch with the times.
- Facing the prospect of having to move their plants and factories from other countries without the cash to do it.
The companies listed above are unfortunately comprised of one or more of these financial challenges, which buys them a spot on The Blacklist.
Now that you know what NOT to buy, let’s switch gears. Let’s step into America 2.0.
Prime Stock Picking Environment: The Best ETF for America 2.0
As America 2.0 unfolds, America 1.0 companies facing these financial challenges will soon fade away.
The key to building a portfolio for future stock growth is to rid it of fading America 1.0 companies and sow it with America 2.0 companies within our Bold Profits seven mega trends:
Right now, we’re living in a prime stock-picking environment.
But to profit, investors need to make sure they’re choosing the best stocks from our specific America 2.0 mega trends.
America 2.0 stocks will be the first out of the starting gate, propelling higher, as the U.S. economy recovers.
One of the very best America 2.0 ETFs you can buy today to take advantage of is the ARK Innovation ETF (NYSE: ARKK).
This ETF holds 33 of the most innovative companies of today.
ARKK invests in companies relevant to the theme of disruptive innovation.
Year to date, it’s up 11% while the major U.S. indices are underwater.
And since its recent 52-week low on March 18, 2020, it’s up a staggering 60.4%! It’s beating the Nasdaq 2-to-1, the Dow Jones Industrial Average and the S&P 500 Index by 3-to-1:
This past week I managed to shock a few of my friends and leave them flabbergasted when I exposed certain America 1.0 stocks to them.
If you’re not maintaining or paying close attention to your investments — either on your own or with the help of a certified financial planner — it could cost you in the long run.
With that said, I look forward to wrapping up this series with you next week in “Part 3: Maintenance.”
Until then, please feel free to follow me on Twitter @ALancasterGuru and tweet me your America 2.0 experiences! I’ll be sure to post any timely investment information I come across that I think you’d find helpful.
Until next time,
Director of Investment Research, Banyan Hill Publishing
America 2.0: The Market’s Incredible Future
If you haven’t seen Paul Mampilly’s new America 2.0 video, you can watch it here:
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среда, 29 апреля 2020 г.
Is Maple Leaf Foods (TSX:MFI) Stock a Buy After Q1 Earnings?
Timor Invest
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Protein products giant Maple Leaf Foods’s (TSX:MFI) stock price rose over 3% in early trading on Wednesday, as investors appreciated the company’s latest first-quarter financial results, which were released before the market open.
The latest financials confirm how strong a defensive play Maple Leaf stock is during the COVID-19 pandemic, even as the new plant-based protein division, which could challenge Beyond Meat at its game, drains cash flow.
Maple Leaf reported a 12.8% year-on-year growth in revenue to $1.02 billion for the quarter ending March this year. Adjusted operating earnings increased by 7.3% and adjusted earnings per share at $0.21 were 5% higher than last year’s numbers.
However, net earnings were a loss of $3.7 million (or $0.03 per basic share), as non-cash fair-value losses in biological assets and a $36 million loss on derivative contracts gobbled accounting profits.
Strong revenue performance during a pandemic
Maple Leaf has mastered the art of efficiently supplying consumers with tasty meat protein foods for decades. Its old meat protein products segment continues to generate positive growth with a strong 12.7% sales growth over last year. Increased exports to China and Japan, a favourable mix towards premium-priced offerings, and stronger volumes combined to deliver a good quarterly performance.
Perhaps the latest growth was due to pantry loading, but the company’s revenue growth trajectory has been largely positive over the past five years.
Watch the new business within the business
The company’s strategy to rapidly transform its product portfolio to include a plant-based protein foods division should attract investor attention. The plant protein segment generated a 25.9% year-over-year revenue growth, or double the growth rate of the legacy meats division.
Owning Maple Leaf Foods stock today gives you a stake in two distinct businesses — a legacy meat protein business that is steadily growing with healthy profit margins, and an exponentially growing plant protein business that’s currently trendy and promises to give Beyond Meat a run for its money.
As the plant protein segment grows to command a significant portion of the company’s overall sales, Maple Leaf stock should attract higher valuation multiples, perhaps even a proportionate Beyond Meat valuation premium.
Remember to watch cash flow
Maple Leaf continues on a strong drive to build its businesses, and the company has since increased its net debt position by 66% to $640.6 million over the past year. This was done primarily to fund growth capital expenditures, with revised capital spending expected at $650 million for this year.
Current strategic initiatives include investments in an Ontario poultry production facility to increase handling capacity and the construction of a plant protein production facility in Indiana.
These are the necessary capital outlays for growth. However, higher leverage on the balance sheet will require increased cash flow generation capacity to service debt repayments.
Cash flow from operations was negative for the first quarter due to higher working capital investments and derivative transactions. Free cash flow was also negative due to ongoing capital projects.
I hope the COVID-19 pandemic won’t cause any further construction delays. The processing should become operational early to enable quicker recoupment of costs and cash flows.
Foolish takeaway
Maple Leaf stock is a great candidate for a defensive play during the COVID-19 pandemic and the coming recession. I have high hopes for the emerging and fast-growing plant protein business, too.
The company is also a reliable dividend-growth stock after six consecutive years of regular payout increases. A 10% dividend increase for 2020 follows another 11.5% increase in 2019. The $0.16-per-share quarterly dividend now yields a respectable 2.4% annually.
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Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool recommends Beyond Meat, Inc.
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This TSX Dividend Stock Is Looking Cheap
Timor Invest
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One of the top investment strategies for long-term investors is dividend investing. TSX dividend stocks are always companies investors are on the lookout for.
Dividend stocks, however, become even more attractive when the market thinks the economy may be headed for a recession.
Companies with solid businesses that can be relied upon through a recession usually perform the best. There is little to no risk to the dividends, so investors can count on them to provide passive income. This is important, as most stocks will lose value in a recession.
So, dividend stocks can help investors to build up a cash position. Then that cash can be used to find other exciting long-term businesses that are trading cheap.
One of the top TSX dividend stocks to consider adding to your portfolio today is Pizza Pizza Royalty (TSX:PZA).
Stable dividend stock
In general, Pizza Pizza is the type of stock that has an extremely stable dividend. Because it’s a royalty company, the changes in income it gets from its franchises only fluctuate slightly each quarter.
This keeps cash flow remarkably consistent for Pizza Pizza, which allows the company and investors to have a good idea of the dividend’s reliability.
Although the stock is generally reliable, the current shutdown caused by the coronavirus is an unprecedented situation that has caused a significant decline in sales temporarily.
Restaurant business
In the past, I have been most bullish on Pizza Pizza in the Canadian restaurant sector. This was in large part because of it being the most defensive business in the space.
Those defensive attributes are what have allowed Pizza Pizza to outperform almost every other restaurant and QSR dividend stock on the TSX.
Not only is Pizza Pizza seeing less of a drop-off to sales (albeit still a significant drop), but its dividend has also remained more resilient than most of its peers.
Many restaurant royalty stocks have had to resort to suspending the dividend altogether. Pizza Pizza, however, has only temporarily reduced its dividend and by just 30%.
A 30% dividend cut is more than most investors and analysts had expected, but so too is Pizza Pizza’s drop-off in sales.
Risks to watch for this dividend stock
The main risk that I see is prolonged shutdowns or a second wave of shutdowns. This could have two different consequences.
A shutdown that lasts longer than normal could eventually see sales erode enough that this dividend cut is no longer sufficient.
Currently, Pizza Pizza can withstand a drop off in sales of roughly 30%. However, we are already seeing 10% of sales gone from non-traditional restaurants and management, pointing to almost a complete drop off in walk-in sales.
In total, this could end up being a decrease in sales of closer to 40%. Plus, the longer the shutdowns go on, the worst I’d expect that to become.
And if the economy stays shut down long enough, franchisees may go out of business. If this were to happen and a significant number of locations had to close, royalty income could take a major hit.
While both of these are possibilities, in my view, the chances of either materializing are still minimal.
Bottom line
At this point, the TSX dividend stock is still a buy and offers a yield of 6.8% at these levels. Plus, if everything works out, and the economy can open up again soon, that dividend could be raised back close to pre-coronavirus levels.
Just because it’s the best-positioned restaurant stock on the TSX doesn’t mean it has no risk, though. So, make sure to stay conservative and diversify your investments well, especially in an uncertain time like this.
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Fool contributor Daniel Da Costa has no position in any of the stocks mentioned. The Motley Fool owns shares of PIZZA PIZZA ROYALTY CORP.
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Brave Browser Reports That EU Governments Are Failing at Privacy Protection
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On April 27, Brave browser filed a complaint urging the European Commission to take action against EU governments that fail to adequately protect their citizens.
A recent report compiled by the Brave team concludes that most EU member states do not adequately staff their General Data Protection Regulation, or GDPR, enforcers:
“Only five of Europe’s 28 national GDPR enforcers have more than 10 tech specialists. Europe’s GDPR enforcers do not have the capacity to investigate Big Tech.”
Source: Brave
Regulators can’t afford to fight for privacy
Furthermore, the report stipulates that the enforcement agencies are underfinanced, which leads to reluctance on their part to engage in expensive litigation against tech giants:
“Even when wrongdoing is clear, DPAs [data protection authorities] hesitate to use their powers against major tech firms because they can not afford the cost of legally defending their decisions against ‘Big Tech’ legal firepower.”
Source: Brave
The complaint filed by Dr. Johnny Ryan, Brave’s chief policy and industry relations officer, urges the European Commission to take action and if necessary to refer the case to the European Court of Justice:
“Brave is requesting that the European Commission launch an infringement procedure against the European Member State Governments, and refer them to the European Court of Justice if necessary.”
The complaint lists every EU member state with the exception of Germany, which, according to the report, is the only nation that adequately staffs and budgets its data protection authority.
Dr. Ryan told Cointelegraph that despite the economic crisis, he expects the European governments to increase financing of its data protection authorities:
“I expect a budgetary increase. Not least because the credibility of the GDPR is critically important to the EU.”
Battle against Google
Previously, Brave filed a complaint against Google with its main European regulator, accusing it of violating Article 5(1)b of the GDPR. It should be noted that Brave is built on Chromium framework, an open-source project from Google. Dr. Ryan does not believe that Brave’s activism could lead to the tech giant’s adverse reaction against it.
Perhaps, with massive stimulus packages being thrown around, some of this money could be routed to the data protection authorities.
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Gold Alert: This Breakout Points to Big Gains
Timor Invest
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A great buying opportunity in gold miners just opened up. And we can see it in one chart.
Technical analysts, like myself, look for patterns in price charts. Patterns represent the emotions of traders.
Among the most reliable patterns is the “big base,” which shows apathy. Investors must lose interest in an investment for it to develop.
So it makes sense that the pattern starts to form after a bear market.
In a bear market, investors sell. When most get out of their positions, prices stop falling.
That’s when the big base forms, before there’s interest in buying.
For months, with no interest from buyers or sellers, prices move back and forth in a narrow range.
The pattern is completed when prices break above the top line in the pattern. This is a pattern for long-term investors because the base takes years to form.
Initially, only aggressive traders buy the breakout. As the price move continues, other investors become interested. Within months, trend followers buy. Eventually, momentum traders buy.
Waves of buying drive a long-term uptrend. And now we have an opportunity to get into this trend in gold miners…
Gold Miners Are Breaking Out Right Now
The chart below shows a historical example of a big base. A current trade based on the pattern is at the bottom:
Apple’s Big Base Breakout vs. Gold Miners’ Big Base Breakout
“Big base” patterns form when prices move back and forth in a narrow range. Analysts draw rectangles to highlight this range, as you can see in these charts.
The Apple Inc. (Nasdaq: AAPL) chart shows the potential gains — 1,100% in less than four years. A four-year base was followed by a four-year bull market.
Now the same type of pattern is appearing in gold miners.
In fact, the VanEck Vectors Gold Miners ETF (NYSE: GDX), an exchange-traded fund (ETF), shows a buy signal right now.
GDX is breaking out of a seven-year trading range. This signal comes after many investors lost interest in gold mining stocks as gold prices moved sideways.
The breakout is an indicator that interest in gold is picking up.
This Could Be the Best Way to Trade Gold
Gold miners generally move in the same direction as gold prices. But miners offer some advantages.
Gold miners, in fact, could be the best way to trade gold. Profitable miners are a leveraged investment in the metal.
As an example, consider a mining company that spends $1,000 an ounce to produce gold.
This miner produces 1 million ounces a year. If gold trades at $1,700 an ounce, the company earns $700 an ounce in profit, or $700 million.
If gold increases to $2,000 an ounce and costs remain the same, the miner earns $1,000 an ounce, or $1 billion. Earnings increase more than 40% as the price of gold increases about 18%.
In this example, the miner offers more than 2-to-1 leverage. A 1% increase in gold prices results in a 2.2% increase in the earnings of the mining company.
This leverage makes gold miners an ideal way to invest in gold. That’s especially true when the chart is flashing a big base buy signal.
So look into the VanEck Vectors Gold Miners ETF (NYSE: GDX) to get in on this breakout.
Regards,
Editor, Peak Velocity Trader
P.S. Money & Markets Chief Investment Strategist Adam O’Dell is also high on gold mining stocks right now. Click here to read his take on MoneyandMarkets.com.
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U.S. Shrinkage, Box Office Trolls, Boeing Blows
Timor Invest
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Country Jerome and the Fed
And it’s a one, two, three … what are we buying for? Don’t ask me, I don’t care a wit; next stop is a bull market.
And it’s a five, six, seven … open up the pearly gates. Well there ain’t no time to wonder why, whoopee! Stocks are gonna fly.
You get the point. This song lyric thing of mine is a sickness, really.
In case you don’t know what I’m talking about here, U.S. gross domestic product fell 4.8% in the first quarter, according to the Commerce Department. It was the U.S. economy’s biggest contraction since the 2009 financial crisis and the first since 2014.
One more quarter of negative growth, and we officially get a recession. Two more, and we win a set of Ginsu steak knives!
The U.S. economic shutdown wasn’t even in full effect in the first quarter, and yet consumer expenditures dropped 7.6%, durable goods spending plummeted 16.1% and services spending was off 10.2%.
As for the current quarter, economists predict the economy to contract anywhere from 37% to 65%.
So, come on all of you big strong men, Uncle Sam needs your help again. The U.S. economy’s in a terrible fix, right here at home in the stock market. So put down your masks and head back to work; don’t’ worry ‘bout those virus quirks. And it’s …
The Takeaway:
When it comes to investing, there’s a mantra I started repeating to myself lately: The stock market is not the economy.
The economy is clearly in pretty bad shape.
The stock market? Not so much.
This may seem like a major disconnect to many new investors, but it’s actually par for the course.
Right now, many Americans are focused on day-to-day operations. What about my job? What about food? Rent? Mortgage payments?
With the lockdown in effect, and the virus still rampaging across the country, there’s little else we can do but focus on the day to day.
Meanwhile, Wall Street is already looking past COVID-19 … past the current economic woes. It sees a light at the end of the tunnel. It sees a U.S. market rebounding with ferocity from this setback.
The Federal Reserve’s promise of unlimited stimulus takes no small part in this overwhelming optimism.
The divergence between Wall Street and Main Street is a frustrating one … to put it mildly. Even here at Banyan Hill, this crazy market has led to a variety of both boom and bust predictions. But who’s right and who’s wrong? Honestly, we don’t know yet.
There is a fair amount of evidence for both sides.
It’s true that the economy is tanking and that this situation should hurt the stock market. But it’s also true that, through government and Federal Reserve actions, many companies trading on Wall Street have more financial support than they’ve ever had.
I get it, Gary G. … the growing cacophony of “Buy! No, Sell!” makes it hard to sort out your financial future. But, speaking purely as an investor here — your average Joe, in all seriousness — the best thing you can do is this:
- Take a deep breath. You’re not expected to predict the future 100% of the time.
- Pick a strategy you trust.
- Stick with it.
Remember, it is possible to know that the U.S. economy is on fire but still make money in the stock market.
Even a forever-bull like Paul Mampilly has a “rebound” method to spot opportunities when markets are irrational to the gills.
So, why not let Paul Mampilly and his team do the heavy lifting and find opportunities for you?
Going: Boing, Boing Boeing
The situation at Boeing Co. (NYSE: BA) is bad … but clearly not as bad as industry analysts expected.
The maker of the flightless 737 MAX reported a first-quarter loss of $1.70 per share on revenue of $16.91 billion. Both figures whiffed Wall Street’s expectations by a mile. And yet, BA stock was in rally mode today.
Why? Because Boeing promised to pull out all the stops in order to survive. During the post-earnings investor call, Boeing announced plans to cut 10% of payroll using “involuntary layoffs as necessary.” I think most of us call that “being fired.”
The company also promised it was “exploring all of the available options” to acquire additional liquidity. In other words, Boeing is looking for more cash … and it doesn’t care how. Given that the company burned through $4.3 billion in negative cash flow last quarter, Boeing might want to start picking pennies up off the sidewalk.
Going: OK, Google…
So, here’s another Bizarro World hot take for you. Google parent Alphabet Inc. (Nasdaq: GOOGL) beat Wall Street’s revenue expectations, missed on earnings and issued a profit warning. And the stock jumped nearly 9%.
By the numbers, Alphabet missed the consensus earnings target by $0.51 per share, but it beat revenue expectations by nearly $1 billion. What’s more, the company said performance was strong in the first two months of the quarter, but that March saw “a significant slowdown in ad revenue.”
That doesn’t sound too bad, right? Everyone is warning about significant slowdowns right now. However, ad revenue accounts for about 82% of Alphabet’s profit. That could be problematic for GOOGL investors.
Still, at least Alphabet didn’t pull its 2020 guidance like so many other companies.
Gone: Trolling AMC
I’ve been saying it for a while: Once the major movie studios got a taste of direct-to-consumer revenue without the movie theater middleman, they would never go back to the old model.
This week, Comcast Corp.’s (Nasdaq: CMCSA) NBCUniversal announced that, going forward, it would simultaneously release movies direct-to-consumer and in theaters. The announcement came after Trolls World Tour raked in $100 million in three weeks for NBCUniversal.
By comparison, the previous Trolls movie made $154 million in five months, but NBCUniversal only made $77 million after movie theaters took their cut.
But the world’s largest theater operator is mad — hopping mad.
AMC Entertainment Holdings Inc. (NYSE: AMC) said today that, because of the direct-to-consumer move, it will no longer show NBCUniversal movies at its theaters:
Going forward, AMC will not license any Universal movies in any of our 1,000 theatres globally on these terms. Accordingly, we want to be absolutely clear, so that there is no ambiguity of any kind. AMC believes that with this proposed action to go to the home and theatres simultaneously, Universal is breaking the business model and dealings between our two companies.
Shh … shh … do you hear that?
That’s not just a major hissy fit by AMC, that’s the sound of the theater business model dying.
Last week, we talked about staying entertained during quarantine — be it while you’re stuck home, stuck working or just feeling “stuck.” Stick with Great Stuff and Banyan Hill, and we’ll stick by you too no matter how long we’re all … well, stuck.
Anyway, by and large, most of you are catching up on household chores and to-dos — 30.9% of you, if we’re getting technical. (When you start going ‘round the house to tighten and dust all the light bulbs … that might be too far.)
24.6% of Great Stuff readers are spending the quarantine playing ketchup with TV and movies, and I mustard a guess that many of you also clicked that “snacking” option! (I, for one, exercise vicariously through the 12% of you staying fit … that counts, right?)
This week, we’re talking hot-button topics and reopening prospects. We love hearing about your perspective from your neck of the woods. So tell us: What do you think about some places starting to reopen? Take the poll below and let us know!
Got more on your mind? Perfect timing!
You have one day left to make it into this week’s edition of Reader Feedback. Of course … feel free to write in after that for next week’s Reader Feedback, by all means.
You can reach us at GreatStuffToday@BanyanHill.com anytime, rain or shine. The electronic post never sleeps, and you’ve got the whole Great Stuff team eager to hear your thoughts, rants and raves. (Yes, especially yours, Anna K.!)
That’s all for today, but remember that you can always catch up on the latest Great Stuff on social media: Facebook and Twitter.
Until next time, be Great!
Joseph Hargett
Editor, Great Stuff
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CRA Tax Update: 2 Giant 2020 Changes You Should Know
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Coronavirus has changed everything. The whole world is adjusting to the new pandemic-driven reality. Governments across the globe are trying to manage the spread of the virus and control the situation as much as they can. And even if they can’t completely fight off the economic crisis that has been worsening day by day, they are trying to offer some relief to their citizens.
The Canadian government is trying to help its people as well and has tasked the CRA with two important duties in this regard.
Tax deadlines
If it were any other year, people who usually delay filing and paying their taxes until the very last days would have been scrambling to meet the usual April 30 deadline. But this year is different. To offer some relief, the CRA extended the tax filing deadline to June 1 and the tax payment deadline to September 1.
Taxpayers now have four extra months to get their financial affairs in order and scrounge up enough funds to pay taxes. It’s a much-needed relief for people and households that are suffering from a loss/lack of income due to the coronavirus. One important thing that people should take away from this pandemic is that they need to have savings or investments as some kind of a financial safety net.
Safety net
For example, if you had invested $10,000 in Fortis (TSX:FTS)(NYSE:FTS) in April 2000 and chosen a reinvestment plan, you would now have over $140,000 in total capital from this one investment. Your current number of shares would be about 2,666. Currently, Fortis is paying yearly dividends at $1.91 per share, so 2,666 shares can earn you about $5,092 in a year.
On its own, this sum is sizeable enough to pick up a significant portion of your tax bill. And I chose Fortis because it’s one of those stocks that almost everyone understands. It’s a long-standing dividend aristocrat. It’s from the utility sector, therefore resilient against market headwinds, and it’s also a steady growth stock. Even in a volatile market, Fortis is a stock that investors can rely on.
Now that you have more time to prepare and pay your taxes, you should use that time to devise a saving and investment plan. You can start your portfolio with a safe stock like Fortis, but you must start. Investment is a long-term game, and the longer you stay in the game, the higher your chances of victory gets.
CERB
CERB (Canada Emergency Response Benefit) is another government initiative to help people whose livelihood has been snatched away by the pandemic. Those who qualify will get $500 a week for 16 weeks (or $2,000 a month for four months).
Service Canada and the CRA are both responsible for processing CERB applications and releasing payments. Applicants are directed to apply for CERB with only one entity, either Service Canada or the CRA.
One important thing to understand about CERB is that it is taxable income. So if you are unsure whether you will have enough funds in hand next year, you should try and keep some money aside now.
Foolish takeaway
Taxes are an important inevitability. When everything is in order, and you have a regular job or a thriving business, then taxes are just another part of life. But if your regular routine and finances get disrupted by factors beyond your control (like this pandemic), even the routine tax bill can seem like a calamity.
Once you are on the other side of it and have regained control of your finances, make sure to adopt some constructive money habits, and start building yourself a safety net to deal with future financial calamities.
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Fool contributor Adam Othman has no position in any of the stocks mentioned.
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