January 1, 2015 Comments

I have updated many of the Stock Picks as we start a new year. For performance tracking purposes for 2015 (just like the other years) I will use the closing prices from December 31 as the starting prices for 2015. I will use the ratings above. In four cases I have lowered the ratings for 2015 tracking purposes as noted in the table above. In those four cases I did not do a complete update but the stock prices had risen since the last update such that I judged that a lower rating was appropriate.

It’s unfortunate that I don’t have more Strong Buys and (higher) Buys to start the year. But the fact is that there are times when there are many bargains in the market and other times when there are not so many.

I do hope to find more good buys to add to the site before long.

Best wishes to everyone as we start a new year of investing.

The Liquor Stores convertible denture is updated and rated Sell at $105.

Liquor Stores N.A. is updated and rated Sell at $15.40.

Boston Pizza is updated and rated Buy at $21.61 to yield 5.7%. This entity is more like a bond than an equity since it pays out a share of the franchise fee collected from the restaurants. It pays out about 100% of what it collects and the distributions tends to be quite stable but to grow very slowly over the years. It could shrink if same-store sales at the restaurants decline. The unit price could decline for that reason or because interest rates rise. In 2014 it rose 4% in addition to paying out about 6%. If it pays out 5.7% this year and if the price stays flat, that would be a a perfectly acceptable result. I have about 6% of my portfolio invested in this. It will likely provide stability to to my portfolio although that cannot be guaranteed. I hold it mostly in RRSP accounts where the fact that it is a cash yield is not important but I like the stability. Basically, for me, it is alternative to cash which would guarantee stability but would return more like zero to 1.25%.

The final 2014 numbers are in. At the start of 2014 we had 15 stocks rated (lower) Buy or higher. The average gain for those stocks in 2014 was 11.7%. This excludes dividends. It also excludes trading costs and the impacts of currency fluctuations (some of the stocks were U.S. stocks). My own portfolio was up 10.6% in 2014 and that includes dividends, and deducts trading costs and includes currency impacts.

Click here for the details by stock for 2014

For the year, the S&P 500 gained 11.4% and the Toronto stock index gained 7.4%. Both gains exclude dividends.

On Wednesday, the S&P 500 was down 1.0% and Toronto was down 0.1%. A notable gainer was Toll Brothers up 2.9%.

I was wondering if I was too harsh on Element Financial in my update yesterday. The thing is this ambitious management may continue to grow the company aggressively and shareholders could do quite well. Perhaps that is even a the most likely outcome. But as I ponder what I consider to be huge executive compensation (much of it in stock options) combined with management’s view that stock-based compensation should be added back (ignored as an expense) and other aspects of what seems to be an aggressive view of adjusted earnings, I think the correct response, at least for me, is to stay well clear of this company.

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