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Fares Alkassmy

Canadian Model Portfolio update: COVID-19

With the current COVID-19 spreading all over the global. Here is a quick portfolio update:

  • On February 20, S&P/TSX TR achieved new highs closing at $17,944. Since then the benchmark is down -20.29%. Whereas Inovestor Canadian model portfolio is down -17.44%
  • YTD the S&P/TSX is down -15.90% and Inovestor Canadian model portfolio is down -14.26%
  • The best performing stocks in our Canadian model portfolio since 20 February: Dollarama Inc -0.6%, Metro Inc -0.7% and Telus Corpotation -9.1%
  • The worst performing stocks in our Canadian model portfolio since 20 February: Parex Resources Inc -34.7%, Equitable Group Inc. -30.7% and Parkland Fuel Corp -28.6%
  • We remain focus on the long term and avoid current market noises. We believe our portfolio companies are fundamentally sound and should performed well on the long term

Seeking solid transportation stocks in the wake of virus disruptions

WHAT ARE WE LOOKING FOR?

The Wuhan coronavirus has dominated news headlines for the past few weeks. Worldwide, there have been more than 40,000 cases of 2019-nCoV confirmed and more than 900 deaths reported, mostly in China. In the markets, the outbreak has affected multiple sectors, with many disruptions to manufacturing and trade. Notably, many stock prices in the transportation sector are down, especially ones operating in Asia.

Today, we look for companies in the transportation sector that have been affected during the virus outbreak, but which might still have solid fundamentals.

THE SCREEN

We screened the North American companies by focusing on the following criteria:

  • The transportation subsector of the industrials sector;
  • As the coronavirus developments have been dominant in the news for the past 20 days or so, we filtered stocks that are down at least 5 per cent during the same period;
  • A minimum market cap of US$1 billion, as we are targeting large-cap companies only;
  • A positive change in earnings for each share over the past 12 months;
  • A positive 12-month change in sales – a positive figure shows that there is growth and progress in the company’s operations;
  • A positive 12-month change in the economic value-added (EVA) metric – a positive figure shows that the company’s profits are increasing at a faster and greater pace than its costs of capital. The EVA is the economic profit generated by the company and is calculated as the net operating profit after tax minus capital expenses. For informational purposes, we have also included recent stock price, dividend yield and one-year return. Please note that some ratios shown may be as of the end of the previous quarter.

WHAT WE FOUND

We found 14 companies that were potentially affected by the coronavirus news but appear to have strong fundamentals. Here are three of note.

Air Canada: With a market cap of $12.1 billion, the stock price is down 10.7 per cent in the past 20 days. However, sales are up more than 7 per cent over the past 12 months, with a 525-per-centchange in the EVA metric. The company will be announcing their fourth quarter and full year 2019 financial results on Feb. 18.

Singapore Airlines Ltd.: The company is owned by Temasek Holdings (Private) Ltd., the government of Singapore’s sovereign wealth fund. The stock is down around 7 per cent in the past 20 days. However, Singapore remains a strong global financial hub and the government established strong measures to contain the virus. The stock has sound fundamentals and a good dividend yield of 3.3 per cent, it has low risk, with a beta of 0.44, and is currently trading below book value, with a price-to-book-value ratio of 0.7.

United Airlines Holdings Inc.: United Airlines has the second- biggest market cap on our list, at more than US$20 billion. The stock is down 9 per cent in the past 20 days. The company’s fourth-quarter results, released on Jan. 21, narrowly exceeded Wall Street’s estimates. Although the company doesn’t distribute dividends, it had an average earnings-a-share growth of 30.6 per cent over the past five years. Investors are advised to do further research before investing in any of the companies listed in the accompanying table.

 

Company TICKER MKT CAP ($MIL.) 20D PRICE RETURN(%) SALES CHG. 12M (%) EVA CHG 12M (%) EPS CHG 12M (%) DIV. YIELD (5) RECENT PRICE ($) 1YR PRICE RTN.(%)
United Airlines Holdings, In UAL                                             20,158.07                                                     (8.97)                                                        4.74                                                   641.03                                                        3.85                                                            –                                                     79.48                                                   (14.29)
Scorpio Tankers Inc. STNG-N                                               1,263.43                                                   (38.28)                                                     14.90                                                   338.50                                                        5.40                                                        1.34                                                     21.73                                                     24.61
Seaspan Corporation SSW-N                                               2,704.24                                                   (10.75)                                                     12.07                                                   215.14                                                        0.30                                                        4.70                                                     12.54                                                     29.78
Sats Ltd SPASF                                               3,589.39                                                   (12.30)                                                     27.69                                                     86.92                                                        0.01                                                            –                                                        3.21                                                     (6.52)
Singapore Airlines Ltd. SINGF                                               7,288.54                                                     (7.34)                                                        2.84                                                   154.47                                                        0.01                                                        3.33                                                        6.15                                                   (15.20)
J.b. Hunt Transport Services JBHT-Q                                             11,951.09                                                     (5.51)                                                        6.39                                                     64.37                                                        0.27                                                        0.89                                                   112.52                                                        0.83
Hamburger Hafen Und Logistik HHULY                                               1,740.29                                                     (5.89)                                                        2.11                                                   363.62                                                        0.16                                                            –                                                     12.42                                                     10.63
Frontline Ltd. FRO-N                                               1,377.33                                                   (37.85)                                                     18.84                                               1,641.11                                                        2.00                                                            –                                                        7.80                                                     70.10
Fraport Ag Frankfurt Airport FPRUY                                               7,072.56                                                     (9.28)                                                     10.39                                                     16.66                                                        0.76                                                            –                                                     38.28                                                     (5.66)
Euronav Nv EURN-N                                               2,077.03                                                   (24.24)                                                     55.39                                                   746.57                                                        1.12                                                            –                                                        9.44                                                     26.99
Cosco Shipping Holdings Co., CICOF                                               4,413.43                                                   (16.28)                                                     36.74                                                     15.43                                                        0.02                                                            –                                                        0.36                                                     (7.90)
Comfortdelgro Corporation Li CDGLF                                               3,390.04                                                   (10.06)                                                        1.34                                                     53.85                                                        0.01                                                            –                                                        1.57                                                     (9.77)
A.p. Moller – Maersk A/s Cla AMKBF                                             25,105.01                                                   (12.01)                                                        6.99                                                     17.32                                                     28.23                                                        2.02                                               1,235.95                                                     (8.88)
Air Canada AC-T                                             12,096.75                                                   (10.69)                                                        7.77                                                   525.40                                                        2.66                                                            –                                                     45.46                                                     49.41

 

*Currency figures for AC in Canadian dollars

Seeking solid transportation stocks in the wake of virus disruptions

WHAT ARE WE LOOKING FOR?

The Wuhan coronavirus has dominated news headlines for the past few weeks. Worldwide, there have been more than 40,000 cases of 2019-nCoV confirmed and more than 900 deaths reported, mostly in China. In the markets, the outbreak has affected multiple sectors, with many disruptions to manufacturing and trade. Notably, many stock prices in the transportation sector are down, especially ones operating in Asia.

Today, we look for companies in the transportation sector that have been affected during the virus outbreak, but which might still have solid fundamentals.

THE SCREEN

We screened the North American companies by focusing on the following criteria:

  • The transportation subsector of the industrials sector;
  • As the coronavirus developments have been dominant in the news for the past 20 days or so, we filtered stocks that are down at least 5 per cent during the same period;
  • A minimum market cap of US$1 billion, as we are targeting large-cap companies only;
  • A positive change in earnings for each share over the past 12 months;
  • A positive 12-month change in sales – a positive figure shows that there is growth and progress in the company’s operations;
  • A positive 12-month change in the economic value-added (EVA) metric – a positive figure shows that the company’s profits are increasing at a faster and greater pace than its costs of capital. The EVA is the economic profit generated by the company and is calculated as the net operating profit after tax minus capital expenses. For informational purposes, we have also included recent stock price, dividend yield and one-year return. Please note that some ratios shown may be as of the end of the previous quarter.

WHAT WE FOUND

We found 14 companies that were potentially affected by the coronavirus news but appear to have strong fundamentals. Here are three of note.

Air Canada: With a market cap of $12.1 billion, the stock price is down 10.7 per cent in the past 20 days. However, sales are up more than 7 per cent over the past 12 months, with a 525-per-centchange in the EVA metric. The company will be announcing their fourth quarter and full year 2019 financial results on Feb. 18.

Singapore Airlines Ltd.: The company is owned by Temasek Holdings (Private) Ltd., the government of Singapore’s sovereign wealth fund. The stock is down around 7 per cent in the past 20 days. However, Singapore remains a strong global financial hub and the government established strong measures to contain the virus. The stock has sound fundamentals and a good dividend yield of 3.3 per cent, it has low risk, with a beta of 0.44, and is currently trading below book value, with a price-to-book-value ratio of 0.7.

United Airlines Holdings Inc.: United Airlines has the second- biggest market cap on our list, at more than US$20 billion. The stock is down 9 per cent in the past 20 days. The company’s fourth-quarter results, released on Jan. 21, narrowly exceeded Wall Street’s estimates. Although the company doesn’t distribute dividends, it had an average earnings-a-share growth of 30.6 per cent over the past five years. Investors are advised to do further research before investing in any of the companies listed in the accompanying table.

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