Monday, 12 January 2015

Next Buy Watchlist: January 2015

   I am pretty happy to be able to post a Next Buy Watchlist this January! In December I wasn't sure if I would have enough extra capital to make a new stock purchase for this month, primarily due to a lot of expenses incurred in December. But, after reviewing my current cash levels, projected income and expenses for this month and February I'v found that I do indeed have some extra cash to deploy this month! And with all of the recent trouble within the Oil and Financial sectors to name a couple, there are quite a few great companies whose stocks prices have become quite tempting for me. On my shortlist of names are: Bank of Nova Scotia (BNS), Royal Bank of Canada (RY), Toronto Dominion Bank (TD), Pembina Pipeline (PPL), Veresen (VSN), Suncor (SU), and Dream Office REIT (D.UN).

    All of these positions are companies which I already hold and wish to build up. They can be broken down to three groups, with a reason for each:

1) Major Canadian banks which I think are attractively priced from recent pullbacks, and all of which I want to grow my positions in: BNS, RY and TD. I'v left National Bank of Canada out because I am still not sure if I want to ultimately be holding 4 banks within this particular account due to the TFSA's contribution limit. To learn more about the TFSA, you can check out my post on it here if you are not familiar with it.

2) Many of the Energy companies which I hold have been fairly battered in the past few weeks and are trading below my average cost for them, making for good opportunities to dollar-cost-averaging those positions quite heavily. In particular, PPL and VSN are more tempting for me due to their more indirect exposure to the price of oil, since their businesses focus more on midstream, oil sector infrastructure rather than actually selling and producing oil unlike SU which will probably continue to be hit hard come their next quarterly earnings. However, buying more of SU would mean DCA'ing down on a currently 20% loss and hopefully if/when Oil does increase my chance to get back to a break-even position would be quicker. Such a play though would be riskier though, and I think if oil's weakness does become prolong SU will more likely cut its dividend than PPL or VSN in my opinion. On a side note, if Algonquin Power and Utilities (AQN) stock price were to dip unexpectedly in the next week or so, then I might just buy more of them, as a larger position than I currently had would allow me to start a DRIP with them that would allow me to get at least two shares a quarter. AQN is also a utility and renewable energy company which is relatively unaffected by the price of oil.

3) Dream Office REIT has taken quite a beating in its stock price in the past few months as the United States ended its last round of quantitative easing and the likely hood of interest rates increases. Dream has seen its stock price decline 8.29% in the last six months, pushing its stable dividend up to a yield of 8.36%.
    Despite the seemingly foreboding news of office tower oversupply due to a large number of new office buildings being constructed. Dream reported a strong fourth quarter as it managed to renew nearly 60% of its expired leases, and has an occupancy of 91.3%, above the industry average of 89.7%. Dream has also been repurchasing shares, with nearly a million shares bought back for cancellation in the past. For those reasons I am not particularly concerned about buying more of Dream, and the dividend yield is very good, where even a fairly small addition would easily mean an extra $4 in distributions per months for me!

    All in all, deciding on which of these companies I will buy will come down to whether or not I want to add more to my Financial holdings which are currently at 18%, Energy 40%(26% oil, 14% renewable) or REITs 20%. As well as the price of those individual stocks on the day of, as I would prefer to buy one which is down 1% that day rather than up, unless of course there was bad news attached to the drop in price.

End note: As I mentioned in my Happy New Years post, I am working on the details of my Next Buy Watchlist 2014 performance review post. And are there any opportunities that have caught your eye recently? I'd love to hear about them!


  1. I have the large Canadian banks on my watch list for January as well. I just added to my TD earlier this month and may add to my RY and BNS as well. Looks like the drop in these banks are coinciding with the decline in oil. No one knows the bottom of either. All we can do is average down and have a long term outlook. Thanks for sharing.

  2. Yeah, if I had more cash I would definitely pick all three of those up and average down on them all(except RY, which would just be a good price imo). And yup, I have read as well that they might suffer a bit due to their connection to the Energy sector, but I'v also read some of the press conferences/articles from their CEO's down playing it(to be expected). They mainly outlined how total assets connected to oil isnt that high, and that many of the companies still have a lot of room left on their lines of credit with the banks.
    Certainly still quite good for the long run. Happy investing!

  3. Im still unsure about oil right now as it could be a couple eyars till a rebound. I am a bit more optimistic on the CDN banks tho. Big 6 is not going anywhere!