Looking for investing ideas? Here’s your weekly digest of the Globe’s latest insights and analysis from the pros, stock tips, portfolio strategies plus what investors need to know for the week ahead.
This 5%-yielding power and utility stock is a buy-and-holder’s dream
With the constant drumbeat of unsettling financial news, it’s easy for investors to become fixated on short-term events, John Heinzl writes. But that could lead you to sell perfectly good stocks in an attempt to avoid whatever financial bogeyman you fear is hiding around the next corner. A less stressful – and more profitable – approach is to buy solid companies and hold them through good times and bad. Case in point: Algonquin Power & Utilities. The stock’s performance offers an excellent illustration of how time, dividend growth and compounding – not trading in and out based on headlines – are an investor’s most potent weapons.
Related: John Heinzl’s Yield Hog model dividend growth portfolio as of April 30, 2019
What investors need to know about Onex after the WestJet deal
Onex Corp. has been busily assembling a broad collection of companies that few investors have heard about – from Clarivate Analytics to Carestream Health to KidsFoundation Holdings – giving the Canadian private-equity company a relatively low profile among retail investors, David Berman writes. But Onex’s deal for WestJet Airlines, announced on Monday, will most certainly boost its profile, and perhaps give the stock price a much-needed lift after a 27-per-cent slide since July, 2017. Given that many of its operating companies are privately held, though, Onex can be a challenge to value. Investing in Onex means betting on the acumen of a private-equity company that has been in the business for decades, rewarding long-term shareholders with index-beating gains.
Read more: Gordon Pape’s mailbag: Portfolio tweaks for a correction, hyperinflation protection and short-term investment options
By buying into Amazon, Warren Buffett rethinks what it means to be a value investor
Earlier this month, Warren Buffett revealed to the world that Berkshire Hathaway Inc. had taken on its first stake in the e-commerce juggernaut Amazon.com, writes John Reese, CEO of Validea.com. A regulatory filing confirmed how much: 483,300 shares, or US$860.6-million worth of stock, as of March 31. For years, the billionaire value investor famously avoided high-flying tech stocks such as Amazon, which have dominated index returns for the past year-and-a-half. But he seems to have come around to a new way of thinking about what it means to be a value investor. Berkshire’s decision to buy Amazon wasn’t based on looking at the price-to-book or price-to-earnings ratio in a vacuum, rather it was based on an estimate of future cash flows.
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These are the numbers that demand you diversify your investments globally
The Canadian stock market is what it is – old-school sectors, such as financials and resources, rule, while new economy sectors, like health care and tech, are nearly insignificant, Rob Carrick writes. This is what passes for big change in the S&P/TSX Composite Index – industrials have edged past materials to become the third-largest sector, after financials and energy. Health care was at 2.2 per cent, tech at 4.8 per cent. The S&P 500 is the complete opposite of the S&P/TSX, and the trend is becoming more pronounced over time. You’re starving your portfolio of two of the most dynamic sectors in today’s economy – tech and health care – if you don’t diversify globally.
More from Rob Carrick: How a hot trend in electronic banking is making life easier for seniors
The alcoholic-beverage sector is losing its buzz, and caffeine is taking its place. Here’s how investors can profit
Peddling booze continues to be a steady money machine, but the prospects for expansion are looking much more limited than they once did — and investors should take note, Ian McGugan writes. Since 2014, big purveyors of coffee, energy drinks and other stimulants have provided superior returns to the alcohol-fuelled giants. There are some exceptions to this general rule, but the strong performance of the caffeine cartel should provide investors with something to mull while they’re sipping their Americanos. As big brewers expand into non-alcoholic versions of their flagship products, investors may want to view the shift as a cry for help. When an industry has to scramble for growth by gutting one of the key aspects of its traditional offerings, it is arguably time to look elsewhere for profits.
What investors need to know for the week ahead
Canada’s big banks start releasing their second-quarter in the week ahead, starting with CIBC on Wednesday, and RBC and TD on Thursday. Other companies issuing their latest financial results include Wallbridge Mining Company Ltd., Home Depot Inc., Lowe’s Companies Inc., Best Buy Co Inc. and HP Inc. Economic data on tap include: U.S. existing home sales for April (Tuesday); Canadian retail sales for March (Wednesday); U.S. Fed minutes for April 30-May 1 are released (Wednesday); Canada’s wholesale trade for March (Thursday); U.S. initial jobless claims (Thursday), as well as U.S. new home sales for April (Thursday).
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