FRIDAY, MARCH 27, 2020| THEGLOBEANDMAILO B9
EYEONEQUITIES DAVID LEEDER
AG GROWTH (AFN-TSX)
CLOSE $16.77, UP20¢
COMPUTER MODELLING (CMG-TSX)
CLOSE $4.52, UP5¢AGF MANAGEMENT (AGF.B-TSX)
CLOSE $3.14,DOWN11¢NORBORD (OSB-TSX)
CLOSE $18.86,DOWN$1.21FACEBOOK (FB-NASDAQ)
CLOSE US$163.34, UPUS$7.13Desjardins Securities analyst Da-
vid Newman said the spread of
COVID-19 is likely to stretchAg
Growth International Inc.bal-
ance sheet metrics as it works to
“rightsize its cost structure amid
top-line challenges.” He lowered
his rating to “hold” from “buy” af-
ter reducing his financial projec-
tions for both 2020 and 2021.
Target:Mr. Newman sliced his
target to $28 from $57.50. The
consensus on the Street is $43.57.
Industrial Alliance Securities ana-
lyst Elias Foscolos expects a drop
in oil prices to impact the spend-
ing of Computer Modelling
Group Ltd.’sclients, leading him
to downgrade its stock to “spec-
ulative buy” from “buy.”
Target:Waiting for the compa-
ny’s “response to the current
macro situation,” Mr. Foscolos
lowered his target for CMG shares
to $6 from $7.75. Consensus is
$7.21.Expecting negative investment
returns to result in weak industry
flows for “at least a year and pos-
sibly longer,” CIBC World Markets
analyst Paul Holden downgraded
AGF Management Ltd.to “neu-
tral” from “outperformer.” “We
assume that AUM declines by 18
per cent in FQ2/20 and that it
takes six quarters of positive per-
formance for markets to recover,”
he said.
Target:His target fell to $6 from
$8.50. Consensus is $4.25.Given its “sizable” market share,
Norbord Inc.’sresponses to the
COVID-19 crisis is likely to have
“meaningful impact” on the Ori-
ented Strand Board industry, Ray-
mond James analyst Daryl Swet-
lishoff said. “We expect uncer-
tainty to persist as long as the CO-
VID-19 pandemic is ongoing,
however, with price erosion ex-
pected for OSB markets,” he said.
Target:Keeping a “strong buy”
rating, he cut his target to $44
from $54. The average is $43.75.Citigroup analyst Jason Bazinet
lowered his financial expecta-
tions forFacebook Inc.to reflect
a decline in digital advertising
spending resulting from the im-
pact of COVID-19. “We believe
that the global spread of CO-
VID-19 and the ensuing economic
disruption will have a material
impact on top-line growth for
Facebook in 2020-2021,” he said.
Target:Maintaining a “buy” rat-
ing, Mr. Bazinet cut his target to
US$195 from US$240. Consensus
is US$235.57.WHAT AREWELOOKING FOR?
The SPDR S&P 500 ETF Trust
(SPY) dropped more than 35 per
cent since February’s record high
before posting a 15-per-cent
short-term rebound this week.
So, is this the time to buy? No
one knows. But it is a good time
to have a strategy in place and
stick to it.
If you are a bullish long term
investor, accumulating quality
companies in small increments
as the market attempts to find a
bottom may be a great opportu-
nity, but be prepared for the pos-
sibility of further declines and
increased volatility.
For those who are comfortable
with volatility, here are a few U.S.
stocks our research team in Otta-
wa has found when applying a
“bottom feeder” strategy.
THESCREEN
We will be using Trading Central
Strategy Builder to search for
U.S.-listed stocks that have posi-
tive cash-flow growth in order to
weather this current storm. We
want companies that pay us a di-
vidend so we can be paid to wait
if the markets continue to de-
cline.
A bottom-feeder strategy
looks for companies that have
declined a substantial amount
but remain top quality, so we will
apply a price-performance filter
to look for companies with a
market capitalization of at least
US$5-billion that have declined
at least 30 per cent year to date.
Finally, we are screening for
stocks with a price-to-earnings
ratio well below the S&P 500 av-
erage of 16.9.MOREABOUT TRADING CENTRAL
Trading Central is a global leader
in financial market research and
investment analytics for retail
online brokers and institutions.
Its product suite provides action-
able trading ideas based on tech-
nical and fundamental research
covering stocks, ETFs, indexes,
forex, options and commodities.
Strategy Builder is available
through leading retail brokers in
Canada and worldwide.WHAT WEFOUND
Numerous financial stocks
emerged in the screen; there is
no doubt financial companiesare in a better financial position
when compared with the 2008 fi-
nancial crisis. Topping our list is
Carlyle Group Inc.,one of the
largest firms of its kind, with
more than US$220-billion in as-
sets under management. The
company invests in real estate,
infrastructure and distressed as-
sets, just to name a few areas. Its
stock has rallied more than 130
per cent since its lows in Decem-
ber, 2018, and was in a well-de-
fined uptrend before news of the
coronavirus. Carlyle shares fell
50 per cent this year before post-
ing a rebound this week for a
year-to-date decline of 30.1 per
cent.Next on our list isCanadian
Imperial Bank of Commerce,
which, of course, also trades on
the Toronto Stock Exchange. Its
shares have declined more than
31 per cent year to date. CIBC has
the highest dividend yield on
our list at 7.7 per cent, making it
a viable holding for those look-
ing to be paid to wait for a re-
bound.
Ten more stocks round out
our bottom-up strategy. While
this may be a difficult time to
apply any strategy as global mar-
kets remain highly volatile, it’s a
great time to build up a shop-
ping list of top quality compa-
nies trading at a discount.
Does “no pain, no gain” apply
to equity investing during these
volatile times?
I leave you with a quote attri-
buted to economist John May-
nard Keynes that stuck with me
through the 2008 financial crisis
and a few flash crashes in my ca-
reer: “The market can remain ir-
rational longer than you can re-
main solvent.”
The investment ideas present-
ed here are for information only.
They do not constitute advice or
a recommendation by Trading
Central in respect of the invest-
ment in financial instruments.
Investors should conduct further
research before investing.Twelvequalitydividendstockstradingatadiscount
Select U.S.-listed dividend stocksRANK COMPANY TICKERMKT.CAP.
(US$BIL.)CFGROWTH
(LASTQTR.VS.
PRIORYR.,%)DIV.
YLD.(%) P/EYTD
PERF.(%)1Y
PERF.(%)RECENT
PRICE
(US$)
1 CarlyleGroupInc. CG-Q 7.9 29.7 5.3 6.8 -30.1 30.3 23.35
2 CIBC CM-N 26.0 15.8 7.7 7.4 -31.2 -27.3 58.72
3 InterpublicGrp.ofCos. IPG-N 6.0 76.6 6.8 8.8 -34.8 -23.3 15.78
4 RelianceSteel&Alum. RS-N 5.9 36 3.0 8.6 -30.4 0.4 88.40
5 EverestReGroupLtd. RE-N 7.1 23.2 3.6 8.2 -36.8 -16.4 176.00
6 GoldmanSachsGroupInc. GS-N 57.2 2.3 3.2 6.8 -32.5 -15.1 160.54
7 AmericanFinancialGroup AFG-N 6.0 52.7 2.5 8.0 -35.2 -25.0 68.86
8 OmnicomGroupInc. OMC-N 11.7 19.7 5.0 8.9 -35.6 -23.9 54.90
9 AmeripriseFinancialInc. AMP-N 12.8 5.6 3.8 6.6 -37.8 -13.8 107.48
10 AflacInc. AFL-N 29.3 13 3.1 9.1 -30.6 -19.9 39.94
11 Snap-onInc. SNA-N 6.0 30.9 3.9 9.0 -35.1 -27.0 111.15
12 StateStreetCorp. STT-N 17.3 2.8 4.2 8.4 -37.6 -25.6 49.08
Source:TradingCentralGARY CHRISTIE
NUMBERCRUNCHER
Head ofNorthAmerican research at
TradingCentral inOttawa
E
mily Rae was busy from the
moment the novel corona-
virus started sickening hun-
dreds throughout Canada and
sent stocks plunging.
The Halifax-based senior fi-
nancial planning adviser at As-
sante Capital Management Ltd.
was being peppered with ques-
tions from clients about what
they should do given how com-
panies were laying off thousands
of employees and markets were
plunging. But for some, the virus
and the gloomy economic situa-
tion might have provided a tan-
talizing question: With markets
at five-year lows, is it a good time
to borrow money to invest?
The answer is complex and
depends on how much of a fi-
nancial cushion and a risk toler-
ance one has, experts said.
“I have this strict criteria when
I talk to clients about it or if they
happen to be interested in the
concept and usually by the time
we get to the end of it, the crite-
ria has eliminated almost every-
one,” Ms. Rae said.
She believes borrowing to in-
vest is only a good idea if you
have maximized your registered
retirement savings plan and
have no carry forward, have a
strong cash flow, are in a high
tax bracket, have a high-risk tol-
erance and have a long time
frame for investing and knowl-
edge of the practice.
“You wouldn’t want to do this
as a first-time investor, but if
somebody’s been through a cou-
ple of market corrections and
they understand you have to be
patient and they have met all of
that criteria, we talk about the
individual risk of what they want
to invest borrowed money in and
what can happen if it drops in
value substantially,” Ms. Rae
said.Over in North Vancouver,
Money Coaches Canada financial
planner Annie Kvick said bor-
rowing to invest “does not make
sense at all” for most people.
“If you’re worried that you
might lose your job or your busi-
ness is going to struggle, this is
not the time to invest,” she said.
“If you were to invest, you really
need to know that this is money
you’re willing to give up. We
don’t know where the market is
going to go.”
However, there are some peo-
ple who can stomach the risk
and still live more than comfort-
ably, who might find it an oppor-
tune time, she said.
“If you are someone who’sbeen sitting on cash for a long
time just waiting for something
to happen of course today is bet-
ter to invest than it was three or
four weeks ago, but you need to
have a well thought plan no mat-
ter when you invest,” she said.
Part of that plan should in-
clude diversifying by not invest-
ing all in one stock, so you are a
bit more protected if a particular
sector is ravaged by the virus.
Ethan Astaneh, a Vancouver-
based financial planner at Nicola
Wealth Management, agreed.
While it’s an uncertain time
right now, he expects large es-
tablished companies with sound
financial positions to weather
the storm and perhaps will even
lead the country back to all-time
highs eventually.
“It’s probably that segment of
the stock market that would be
the safest rather than some more
unknown small and microcap
companies for example,” he said.
You don’t have to look hard to
find companies struggling amid
the crisis, but Mr. Astaneh pre-
dicts companies involved with fi-
nances, powering homes, com-
municating and technology to be
a bit more resilient.
But borrowing cash to buy
those stocks will put some inves-
tors in very different positions,
which is why you have to be
careful with this strategy, he
warned. “If you’re in a position
where you have cash, and you’re
just choosing to borrow to invest
even though you’ve got the cash,
that’s a much different proposi-
tion than your only option being
to tap a line of credit or a loan in
order to invest,” he said.THECANADIANPRESSNowisn’tthetime
forborrowingmoney
toinvest,expertssay
Itdependsonyour
financialcushionand
risktolerance,butamid
thecurrentvolatility,it’s
likelybesttoholdoff
TARA DESCHAMPSTORONTO
If you’re worried that
you might lose your job
or your business is
going to struggle, this is
not the time to invest.ANNIEKVICK
MONEYCOACHESCANADA
FINANCIALPLANNERREPORTONBUSINESS|LONDONBlackRock and Credit Suisse reckon it is time to
get back into equities after markets rallied this week
following massivegovernment and central bank stimulus
packages to fight fallout from the coronavirus crisis.
The US$2-trillion U.S. fiscal stimulus has triggered big
gains in global stocks, sending investors rushing to dust
off models from the 2008 crisis to gauge the right time to
buy.
World stocks have risen nearly 8 per cent so far this
week and were on track for their best weekly gain since
December, 2011. They have recouped more than US$5-
trillion in the past two days.
Spotting an inflection point is not easy when the virus
is still spreading rapidly across Europe and the United
States, but BlackRock and Credit Suisse said on Thursday
they had turned slightly bullish on risk assets.
“The unprecedented actions represent the type of deci-
sive policy response we have been calling for – and set the
scene for an eventual economic recovery,” Jean Boivin,
head of BlackRock Investment Institute, said on Thursday.
The world’s top asset manager said the market sell-off
had created significant value for long-term investors and
told clients it now favoured “rebalancing into risk assets.”
Within the equity space, BlackRock said it preferred
U.S. markets owing to the strength of Washington’s policy
response and the quality of the market.
Many investors are still trying to work out when will be
the right time to re-enter markets. At least one model
from JPMorgan shows the correct time would be now,
based on a view that a recession would be short-lived.
Credit Suisse, which is positive on developed market
equities, said: “There is merit in being an early mover
rather than wait until a market bottom has become ap-
parent for all.”
The Swiss bank said that over a six- to 12-month hori-
zon, equities offered “attractive value.”
Notably, U.S. and European stock valuations based on a
12-month forward price-to-earnings ratio now have dipped
well below historical averages, according to Refinitiv data.
REUTERSU.S.MARKETMAVENSTURNBULLISH,
SAYIT’STIMETOBUYSTOCKSAGAINNEWYORKPeter Tuchman, dubbed the “most photo-
graphed trader on Wall Street,” took to Instagram on
Thursday to tell his 10,000-odd followers that he had tested
positive for coronavirus.
The New York Stock Exchange trader, who calls himself
the “Einstein of Wall Street” on his Instagram page, re-
vealed the diagnosis with the picture of a Corona Extra
beer bottle and an emoticon of hands joined together.
At least two more Intercontinental Exchange Inc.-owned
NYSE floor traders tested positive for the virus on Tuesday
according to a memo seen by Reuters.REUTERS‘MOSTPHOTOGRAPHED’NYSETRADER
CONTRACTSCORONAVIRUS