INVESTING TODAY FOR TOMORROW
–Investing Advice You Might Be Able To Use Today
by Murray Soupcoff
Of course, we’re talking about the SOCIALIST home of (a) 35-year-old government pensioners; (b) crony socialism (featuring bribes, booze and babes) for government handouts to money-losing businesses; and (c) a 70% unemployment rate among millennials.
No wonder Margaret Thatcher reputedly coined the phrase: “The trouble with Socialism is that eventually you run out of other people’s money!”
And indeed we’re talking about the cradle of democracy and current home of a chronic “give me, give me” attitude, additionally mixed with record deficits and a “let’s try Communism” political solution to the nation’s problems.
Come on down, Greece, and meet your fans in Russia, Venezuela and Bolivia [and likely America’s trillion-dollar deficit “king”, Barack Obama]!
So it time to exit global stock and bond markets completely this summer?
Well, in my humble opinion, no!
But then again, what do I know? As a Canadian, innocent of American traditions, I thought that Lois Lerner was a patriot who invoked the Fifth Amendment because she supported the right to bear arms, and destroyed her emails by shooting them with a concealed handgun!
WHAT SHOULD YOU DO, INVESTMENT-WISE, THIS SUMMER?
So what’s my advice, as the summer market doldrums approach?
(1) Take any capital gains you have, sell the relevant shares, and put away the cash you raise in a safe mutual fund, or better yet in a safe safety-deposit box (but not under your mattress unless you also have a concealed-carry license and sleep with your Glock beside you).
(2) Wait for the first signs of market “capitulation” (stock prices sliding to new record lows and then beginning a tentative ascent again). Look for cash-rich, debt-free companies that pay a sustainable dividend – meaning the company will be able to “sustain’ that dividend payment through good times & bad (even so bad that 2015 “Ms. Congenial Liar” winner – Hillary Clinton – is elected American president in 2016).
(3) Begin accumulating – slowly buying shares of the dividend-paying companies you’ve identified as potential “winners” in the future – each time the stock market again falls. And then, over time, you will have built up a defensive portfolio of stocks which should tide you over good times and bad.
(4) As part of that strategy, I would strongly recommend that you include, in your stock portfolio, a “basket” of gold & silver stocks which are cash-rich & debt free, and have – in response to the pullback in the price of gold & silver futures , during the last few years – become sufficiently “cost efficient” to extract these metals from the ground to make a profit even at today’s “beaten-down” prices (for what has ultimately been the real “reserve currency” throughout human history, even in biblical times – precious metals).
(4) But caution! Be prepared to hold those stocks until at least the end of 2017, when my study of historical market cycles indicates that global markets will again “cycle” into positive territory again.
SO HOW ABOUT SOME RECOMMENDATIONS ALREADY?
My stock choices today, for tomorrow’s possible profits?
Here’s a brief list:
1) First, as an oil-and-gas stock maven, I would recommend starting to (pardon the pun) stocking up on the highest quality global energy stocks.
And first in our lineup is (drumroll please):
OCCIDENTAL PETROLEUM ($OXY), currently yielding 4.27%.
OXY features a sterling balance sheet, as well as admirable cash-flow generation after paying all its costs to keep its exploration & drilling initiatives going.
In this case, my study of historical commodity cycles, indicates that the price of oil likely will climb back to $70 by the end of 2016 (especially if instability in the Middle East continues).
2) And now entering the precious-metals ring is (another drumroll please):
VENA RESOURCES INC. (VEM.CA), currently not paying any dividend.
Vena Resources is a silver exploration & mining company – headquartered in Canada – but mining in silver in Peru, and “hedging” its bet on silver with additional uranium investments in Peru.
The Company has four silver-mining projects in Peru, covering approximately 7,000 hectares, as well as a significant investment in uranium through share ownership in the “Azincourt Energy” and “Macusani Yellowcake” uranium deposits in Peru.
Thanks to the expertise of its C.E.O. and board of directors, most analysts agree that Vena Resources possess a unique quality of skills and experience relating to mining and finance in Peru and Canada.
And another bonus is that Vena Resources has recently sold its uranium holdings to raise more capital for its ongoing projects in the Americas.
3) Hey, how can one make stock recommendations, in the middle of summer vacation time, without mentioning hotels to stay at? Well, the following isn’t exactly a hotel; but its generous & sustainable annual dividend should generate enough cash yearly, to regularly stay at hotels during summer, autumn, winter and spring vacation seasons:
AMERICAN HOTEL INCOME PROPERTIES REIT (TSX?HOT.UN), yielding 8%
As its name makes all too clear, this Canadian-based REIT owns hotels in the U.S. — 61 to be exact. In fact, all its properties are in the U.S. But the company is headquartered in downtown Vancouver.
But, so what? American Hotel Income Properties’ having a Canadian headquarters doesn’t mean its annual cash dividend is bubkas!
However, most important is the high occupancy rate of the REIT's U.S. hotel holdings.
And the occupancy rate is high. For example, American Hotel boasts a guaranteed occupancy rate of 75 per cent on the rooms it rents to railway crews. And supplying lodging for railway crews accounts for 62 per cent of the company’s business.
Moreover, as the U.S. economy continues to pick up, Americans will start traveling more. They’ll also likely take longer vacations. And as they do, the REIT’s occupancy rate will also probably rise.
And because the REIT receives all its revenue in U.S. dollars, there are extra profits when it converts the American greenbacks to loonies.
Another American Hotel plus? Low volatility. In fact, this consumer stock’s beta, a measure of volatility, is just 0.75 when compared to the TSX Composite Index.
And in the near future, revenues are expected to rise, while net losses disappear. A definite recipe for future profitability and dividend increases.
(4) And last, but not least, let’s turn our focus to the wonderful but profitable world of business software.
In this case, we’re referring to a burgeoning Canadian software company whose chairman is an American -- none other than former Apple Computer CEO, John Sculley.
Sorry for yet another Canadian stock recommendation; but we Canucks are just chauvinists, eh!?!
And besides, who cares what stock exchange a promising technology company is listed on, so long as it stock shares make you lots of dollars (Canadian or American) – which I think it will, if you’re patient and wait for this company to find its take-off point:
PIVOT TECHNOLOGY SOLUTIONS INC. ($PTG.CA;TSX Venture Exchange), currently not paying a dividend.
Summing up, California-based Pivot Technology is a small, value-added reseller of software. And what makes the company most interesting is that it is relatively inexpensive -- trading on 7.0x 2015 cash earnings, with a projected return on equity of more than 40 per cent. And as indicated previously, what also makes this company interesting is that its chairman is John Sculley, former CEO of Apple Computer.
And that should be enough investment prognostication for one day.
After all, as I already mentioned, what do I know about these turbulent times – I mean I never associated the “R” word with Donald Trump. For me, it was the “T” word, “toupee”!
Nuff said on all these matters, I would think.