Finning Int (FTT.TO)

This is like a “Dog of the TSX” type strategy. You can sell Puts on this and get a little bit of it, and then maybe a year from now get a little bit more. You are going to get paid your dividend. A quality name trading below its five-year average with very good metrics. Strong balance sheet and strong Return on Capital. They have buybacks. In his view, this part of the market goes lower. He doesn’t think it is going higher in the next 12 months.

A good company, well managed, good balance sheet. But it does not make the cut for him because he has CNR-T and it is a faster dividend grower. FFT-T will do fine with a two year horizon.

Probably going to be dead money for a while. The dividend is safe and has a low payout ratio. It is cheap and is a quality name.

This is the Caterpillar dealer. The stock is quite weak as a result of the commodity business, their key segment. If you own, continue to Hold, but he wouldn’t add to your holdings.

Had it, but sold it all in Oct. The chart is showing a fishbowl with a rounded top. Thinks it will go back to the $20.00 range. It is in a space that might be a little problematic.

The dividend is well covered. It is a stellar dividend growth story. There is a headwind from Western Canada, but there is also the service revenue from the equipment in the oil patch.

There is weakness in new equipment sales, but they are having modest strength in sales of used equipment, rentals and product support. Also, the lower Cdn$ is mitigating to a certain extent. He doesn’t see a lot of growth. Expects they will be increasing their dividend 12% over the next couple of years. Their payout ratio is really low. You could probably pick away at this if you are patient. 3% dividend yield.

Caterpillar (CAT-N) came out with a weak outlook recently, which hit this company. His numbers are even more negative and assumes new equipment sales fall 20% in Canada, 10% in South America. Even with that, given their strength in product support, he sees their overall earnings actually rising by 5% in 2015. If his assumption is right, it means they earn a $2.29 free cash flow, which gives them about 11% free cash flow yield. If you are looking long-term, the dividend is safe with a 34% payout ratio and the balance sheet is strong. This could be accumulated down at these prices.

Very, very dependent on the resource industries, particularly mining, energy as well as construction. Insofar as you can see the economic landscape picking up, this one longer-term is a good industrial holding from here. For him to get interested in it, he would want to see it below $25.

Equipment makers aren’t the best place to be right now. However he still sees nice EBITDA growth of about 7% and he gets this from a little bit of revenue growth of about 5.5%, but really from improving operations and better margins. Sees their balance sheet strengthening quite a bit and sees their dividend growing nicely over the next couple of years, maybe about 13%. A good quality name. Buy on a pullback.

(Market Call Minute.) Has a new CFO. Thinks they are turning the business around. The mining business is going to be a little bit challenged. He would go to Cummins (CMI-N) instead.

Fairly expensive from a historical perspective. Doesn’t know what you do with this stock. It has some upside potential, but on the whole, he would rather be in Poughkeepsie. Trading at 3X BV, which is about its long-term average high.

Largest Caterpillar (CAT-N) reseller globally. Has sort of waxed and waned with the global mining industry. When base metals are hot, this company is hot. Has done better this year, but looking at a few years, when mining cooled off this cooled off and is now just getting back where it was 3 or 4 years ago. Very well managed. Terrific franchise.

(Market Call Minute.) Caterpillar distributor. Likes this. Cheap compared to its major competitor. It’s in all the growth areas.

Interesting name. New management came in. It was a way for him to have exposure to the mining business without all the volatility. Over the next couple of years it will stabilize and margins will come back.