2005 recap and 2006 predictions

[selkirk]

thought would start a new thread. only recap stock picks, ect.

Predictions 2005

1. gold stays below $500, many gold followers believe gold will break out on a weaker us dollar. not this year, stays in a range upper end $475.

response gold went above $500 but still trades withn 10% of this range. not a gold bug but surprised it broke over $500 answer can it hold threre. gold mining stocks made very little this year in gains, as labour, energy, ect have gone up more than gold. if you like gold better to buy the metal, in most cases.


2. oil stays in a range $37.50-$45. hard to predict oil as I prove every year. like many energy stocks and oil trusts. have sold most income / oil trusts off, waiting to get back in on a sell off-15%.

response: oil and natural gas much stronger than I thought, and that was fine, oil/gas make up almost 30% of the cdn. market. there was brief sell offs in the first quarter, in April (3 day bloodbath) and early fall 20%+ decline in oil/gas stocks, still a great year, especially after april.


3. cdn. dollar stays below .90 many experts believe the cdn. dollar will go to par. that would have a terrilbe impact on exports. dollar just over .80 tops out at .90. The US dollar has a better year than 04.

response: cdn. dollar over .86 so pretty much in the range, and the US dollar had a good year against many major currencies.

4. India and China
1. In India there are currently $350 million considered middle class. purchasing power equivalent to a US family with income of $125,000

2. middle class in India is increasing at 8% a year.
that is 28 million people.

3. the current savings rate of 24%, if it fell 5% it would almost be 1 trillion dollars in consumer spending a year.

4. oil demand in china increased 2002 4.3%, 2003 12.2%, 2004 14.5%

5. look for growth in Brazil, China and India.

6. China was looking at buying Noranda and talk of buying Husky energy. They have also stated interests in buying (investing) in the Alberta oil sands, the greatest oil reserve in the world, next to Sauia Arabia.

The resources may sell of this year, they have had a good run, so a pull back could be expected. however long term base metals and energy plays will be in demand.


response: looks like china grew at 15%+ range, and india and Brazil both had strong growth. China made some small investments pipeline (oil sands ect), so did India. this will continue China and India are on the lookout for oil and gas companies and investments.



Stocks

read an interesting piece on banks and insurance companies. debate was which is the best place to be in 05. they both look good.

ROE%,Earnings growth%,PE, yield,

Bank of montreal 18.9%, 1%, 12.6, 3.2
Scotia bank 18.6,12,13.2,3.2
CIBC 18,10,12,3.7
National bank 18,9,11.3,3.5
Royal bank 17.3,11,12.1,3.5
TD 19.7,12,12,2.9

Insurance companies
Great West Lifco 19.8,13,12.3,2.8
Manulife 13.6,19,12.9,1.9
Sunlife 11.9,12,12.4,2.2

Many people will invest in a CD/GIC at 1-3% but never think about investing in the bank or insurance company. Why not get a yield of 2-3.5%. taxed better with growing earnings and increasing dividends. Does not sound bad for a long term investment.

insurance companies probably grow faster this year but both are good for long term.


2. I like Falconbridge, inco, teck, Alcan and the oils Tailsman, CNQ (cdn. natural resources), Suncor, but believe they will sell off, so can get some great resource stocks 10-20% lower than current prices.

3. penny stocks. these are interesting stocks that i will update in another thread. high risk.....warning. most penny stocks have done well in the past but last year had one that lost 40%+.

Toronto/ cdn. venture

1. DEE my price is $3.25 currently at $3.40. oil/gas jr. large land position and expanding. may make .25 a share in 05.

2. ZED $2.23 energy currently $2.32

3. GZ average price $3.24 now $3.90 oil/gas former olympic management, good management so will take my chances.

4. TIC Titantium $2.74 average price current $3.02, mine. ussually do not do well on jr. mining stocks.

if two out of four go on a run would be pleased.

would add more stocks but have 15% in cash, and cannot find to many stocks that I follow worth buying at this time, so the list is short.



happy new year and best wishes
thanks
selkirk

 

[selkirk]

stocks in 2005 thread return

1. DEE $3.40 $5.57 +63.82%

2. Zed $2.32 $1.52 -34.48%

3. GZ $3.90 $9.96 +155.38%

4. TIC $3.02 $2.78 - 7.94%

overall return of all four stocks 176.78%
three of the four were involved in energy except TIC, trade on Toronto or Venture.

will probably not include any small caps this year, just liked these four plays. also talked about and mentioned True energy have no idea why did not include it in the picks.


Most of the stocks mentioned waiting for a pullback and a small pullback and then went higher for the year.

Inco 30.41% $51.28 $39.92

Teck 85.40% $60.35 $32.55

Alcan -21.57% $47.84 $34.86

Tailsamans 96.31% $61.84 $31.50

CNQ 139% $58.02 $24.275

SU 89.86% $73.59 $38.76

most of these stocks had great years, and were large positions in my portfolio, own or did options on them often both.

Alcan was the biggest loser and was one play that was my biggest mistake. Bought the stock at $61.80 and sold a $60 call for $8.20.
sold another call option after that one, anyways after one year and three options later have broke even.

still hold Alcan and probably hold it for most of next year, and it looks cheap...but there have this feeling I should SELL SELL SELL SELL.....Alcan. once a great low cost producer merged with Pechiny and now a higer but larger producer......just bad.

Falconbridge also had a great year, but I sold my position out in FEB . merging with Inco to create a strong nickel play (also some copper and zinc.)

all in all in was a very good year. do not expect 2006 will be as good as 2004 and 2005. but would have said the same thing last year......


thanks
selkirk

 

[selkirk]

As for what was better in 2005 cdn. bank or insurance companies both groups did well.

just have to look at most divdend funds that invest in banks and insurance companies for the most part are up 18-21%.

hard to go wrong with a bank or insurance company that grows its earnings by 10% a year and raise those divdends every two year. always good to hold a few good financials in your portfolio.

thanks
selkirk

 

[MSM]

THANKS SELKIRK FOR ALL YOUR INFO AND HELP THROUGHOUT THE YEAR. IT IS ALWAYS APPRECIATED.
HAVE A HAPPY AND PROSPEROUS NEW YEAR!!!
MSM

 

[selkirk]

Have a happy and prosperous new year MSM. and to everyone else in the stock forum. 2006 should be an interesting year.

thanks
selkirk

 

[selkirk]

2006 predictions Jan 4, 2006

1. interest rates in the US raise .50% up to .75% in the first six months of 06.

2. In Canada rates go up .75% in the first six months. probably one more rate hike than in the US. In the first six months.

3. Cdn. dollar now at .86 will go over .90. do not believe it will go to par. last year thought the US dollar would hold up against the Euro. Believe the US dollar will be strong this year, but the cdn. dollar will go up at least for the first 6-9 months.

4. gold goes over $575 and probably hits $600

5. China and India grow by 5+, growth in these two countries slow however should be 5-8% range. often it is hard to tell how quickly these countries are growing but China grew by roughly 9.8% in 2005. Most countries would be happy with 2-3% growth.

6. not a gold bug, in fact of all the metal is the one do not care for; Main reason who still have the same ounce you had thousands of years ago. people will sell gold at a certain price as it rises.

still not a bad idea to have 2-5% of the portfolio in gold stocks, or precious metal mutual funds.

believe these companies will show decent returns. and jr. gold mining stocks may have a great year (run the next 2 years/gold would have to pass $600) moose pasture and worthless properties may have marekt caps in the ten/hundreds of millons once again.

gold stocks are not a good term invesment. shorter mine lifes, harder to replace (find new mines) and their costs energy, labour, environment regs. are going up by double digits every year.

7. cdn minority government. conservative or liberal not sure; will not matter much anyways.

8. there will be no cdn. bank mergers. mainly political reasons. BMO, BNS, CM, TD, RY. are still great investments they trade in the US, but are getting to their high end (high end 15-18 pe, low 8-12pe) if they tread water for six months then earnings should catch up. good long term investments. trade in the US and Cnd. should have a financial stock (a few) in your portfolio.

cdn. bank or a regional us player, one that has increasing dividends, earnings.

9. natural gas falls to $9, maybe $8. but will go with $9. still like the long term story. as production (supply) is not keeping up with increasing demand.

prices will cool off, and hopefully a great buying opportunity. missed a few of these last year.

10. oil trades in a range of $50-$55. now it may spike up or down but believe will trade around this range most of the year. do not see $100 oil and also not $30.

11. would still avoid the big 3 GM, Chrysler, Ford, just do not care for the auto sector. many reasons.

a. health care cost, b pension costs. c. strong compeitiion coming in trucks and suvs from japan, korea. d. costs billions to redesign new cars and have to that every 3-5 years. e. car sales in North America should have little growth.

there are some positives and Chrysler has done far better than Ford or GM. if you can come out with a good lineup....ie. cars people will buy with no or little discounts you can do well ie. chrysler 300, charger, magnum, ect.

I do not know what car company will come up with the hot car or just bomb so I avoid the sector.

12. believe the US market will do better than cdn. last year TSX did over 21% mainly on oil/gas and metals. this year SP 500 does better than Toronto.

will do stocks in a few days, just do not have that many.

thanks
selkirk

 

[DOGS THAT BARK]

How many days -- got SEP to fund but can wait till 4-15 if need be

Thanks as always Kirk---will be looking into your Alberta oil sands also--maybe you could give heads up on price you think valid to jump in on.

 

[baby johnson]

kirk, need some advice, do i keep msft and nok...they've been laggards for some time, also own ptr,mot,cygx,dmoi,hmc,sny

thanks for the jelp

i too want in on the oil soon to be extracted from alberta

jr capper

 

[dawgball]

Thanks, selkirk, for your insight.

ahjoah -- imo, you are too tech-heavy if these are the majority of your positions. But I am no expert.

 

[selkirk]

no worries DTB will have a few suggestions in a week or two, will be done them all.

hard to find stocks I really like in large or small cap.
long term cdn. banks, or Sunlife or Manulife are not bad, 10%+.

as for oil off a little today, but will update the alberta oil sands thread. the stocks mentioned in there 03-29-05 despite having good runs in 05. would be the ones would look at today. will update the thread out of TLM (not oil sands), CNQ,SU,PCA (have some interests), ECA. would rank ECA last as it is mainly natural gas and that will fall more. still all good companies.

will update that thread

Ahjoah most of the stocks you mention do not follow that closely so keep that in mind....you probably know more than me.

name price 01-04-06 earnings/share div.yield comments.

MSFT $27.01 00 $1.30 07 $1.45-1.50 div .32 yield 1.2%

would hold on, as they are introducing many new products in the next 12-18 months. time will tell. they should increase their div to .50 and keep on increasing it. hard to grow a company this size, they should give more back to shareholders. would keep look for 10%+ counting div.
counting on better tech market.

Nokia $19.11 05 .98 06 1.10 div .44 yield 2.3%
look 5 years ago, okay six, motorola was the idiot stock that the market hated, and nokia was the great and wonderful.

now roles have reversed. not that expensive, decent yield (hopefully increases), and earnings growth. not bad way to play the sector own the one market likes and the one it used to ....value play.

PTR $85.05 05- 8.75 06 11.10
we are assuming $50 oil for those earnings. stock has a nice yield and has done well, not as good as some other oils but still very well. there are worse oil companies. would watch performance against the group but so far....so good.

MOT 23.40 05-1.12 06-1.26 div .16 yield .7%
if the tech markets goes up this should have a good year. not cheap or a long term holding but wireless is where the growth is....and mot is a flavour of the month...year.

warning, wireless is the place to be, or one of them my main fear in a few year is the competition. fierce.


HMC $27? 06-2.37 07 2.65 div .33 yield 1.10%
Honda motors and Toyota are increasing their sales and grabbing market share in north America.

well run have hybrid technology. and they have a few brands you know...accord,civc.
honda civic when it was redone outsold all ford and gm cars sold in ontario the first month it came out.....that is amazing. and shows how far toyota and honda have come and the droppoff in the big 3, gm and ford anyways.

hate car companies however a good one, and a large japan company, (could also play japan through ewj). also like their motobikes.

may hit $30.

Sanofi Aventis, 46.81 05 2.82 06 3.08
know nothing of how to value drug companies, looking at angiotech, but not buying.

this company is trading near its high and looks strong on a short term technical basis.
you should also maybe look to a product that track drug companies that sometimes take the risk out of one stock....playing the sector.

you probably have done well in this name, and it looks strong short term, just make sure you have a stop in place to sell some or all of the position on a pullback.

dmoi is a penny stock so good luck

CYGX $1.10
good thread in here on the stock, Captain crunch has posted quite a bit of info on the stock.
do not own any, that would be the kiss of death my luck with small drug/health stocks.

still it is making a nice run. hitting all time highs.
when a spec is hitting all time highs sit back and enjoy the ride.

when it is smashing down and making new lows....hit the eject button.
never hurts to get your orginal investment out and a small profit....but would wait especailly if it is making gains every day..


dawgball raises a good point. you should probably have a few more stocks from different sectors. seems to be largely in tech/drugs.

may want to own a financial or two. maybe a retailer, or just an index product that track a major index....to diverisfy.....

good luck.

thanks
selkirk

 

[selkirk]

talking about to diverisfy, at one time in 2005 had 45% in oil and gas (stocks and options), that is great when going up, but you feel every little correction.

Toronto TSX (main cdn. market index) is 30% oil/gas when including trusts..... that is to much weighting in one sector, especially one that had such a great year and can be so volatile.

last time this was the case Nortel was 30% of the index in 1999 and well that did not end.......well.......

note: most oil and gas companies are great investments not just 30% of your portfolio.....

thanks
selkirk

 

[selkirk]

Stocks

will edit/add to the list as I go.

1. HBM Hud bay minerals (trades only on Toronto)

this is small cap mining company.
produced in the 3Q of 2005

tons
19,800 copper
29,500 zinc,
onces 21,800 gold, 309,500 silver.

had 125.9 million in cash, and earned .28 cents.

looking at earnings per share of 2005 .59 2006 .68
believe these levels can be reached and the company is trading at $5.99

note bought some at $5.75, of coarse its low was $1.81. first saw the company at $4.25 have no idea why I waited to 5.75....

in the 3q 2005 they made .28cents but metal prices are higher that what they got.

copper 1.80 now 2
.62 zinc, 446 gold $530now,
silver 7.16 now 9.16

so all of the metals are higher, this is small company that could get taken out by a larger mining company, that realizes a company well run trading at 10X is not the worse investment.

main risk if metal prices fall....also cdn. dollar was 1.20-1US. today closer to 1.15 obviously company would do better with a weaker cdn. dollar. cdn dollar will go up to 1.10-1.
still like the story and well run mining company at 10pe not a bad way to play the base metals.

thanks
selkirk

 

[baby johnson]

sell, need advice as i am neofyte investor, apprreciate learning from respected $$$makers

own bayer, jcc,and intel, would very much like to get in on an upand coming financial or energy/ oil exploration stock

thanks and hope your year is very profitable