Fabrice Taylor is publisher of the President's Club Investment Letter. His focus is North American equities.
IBI Group (IBG.TO)
IBI is a classic turnaround story that checks all of the boxes for this kind of investment: the business has been around for a long time; it's simple; the stock used to be a lot higher; the company has lots of debt; its problems are fixable and there are signs of traction in the turnaround plan.
IBI is an engineering and architecture firm that specializes in urbanization, such as building transit lines. Urban economies around the world grow significantly higher than national economies, and infrastructure spending is poised to grow substantially as governments look to spur growth. IBI has improved its margins and repaid some debt. It also has excellent visibility on its revenues and earnings thanks to a healthy solid backlog. With fairly modest assumptions, including modest debt repayment, this stock could double in the next couple of years or so. I own stock and last bought at about $3.70.
Gold Standard Ventures (GSV.V)
Gold Standard owns the second biggest land position on the prolific Carlin Trend in Nevada. It has been producing strong drilling results and it looks like the deposit has a very good chance of being mine-worthy. Of greater interest, perhaps, is that it includes among its shareholders some very savvy investors who have done the homework for me, including billionaire investor Albert Friedberg, Jim Anthony, GoldCorp and OceanaGold, the latter two of whom invested about $30-million into the company last month. It looks like a very likely takeover candidate given that these two large producers have big stakes, and the smart money is also in. I think investors should always own some gold exposure, and while this is a more speculative investment, I believe the rewards justify the risks if you believe in gold. I own stock and lost bought at $1.28.
The market is still too precarious to be fully invested but I think we'll see opportunities this year, and, in fact, I'm already starting to see some. It's always good to have a healthy cash balance when markets look vulnerable.
Past Picks: April 9, 2015
KGIC (LRN.V) – formerly Loyalist Group (LOY.V)
Then: $0.50 Now: $0.02 -97.00% Total return: -97.00%
Engagement Labs (EL.V)
Then: $0.70 Now: $0.34 -52.14% Total return: -52.14%
Imperus Technologies (LAB.V)
Then: $0.47 Now: $0.10 -78.49% Total return: -78.49%
Total Return Average: -75.88%
I believe energy and mining/resource stocks are near bottom, notwithstanding low demand. This is a function of valuation and short-covering, not earnings growth. Companies in these industries with manageable debt are attractive, as are ETFs that track the industries. Economic growth is still very weak, but in an era of falling and negative interest rates, equities are more valuable, especially dividend-paying stocks. There is a tremendous amount of cash on the sidelines itching to find a home, which bodes well. I think gold will rally as investors start doubting the ability of central banks to move markets and begin to question the weird science these bankers are engaging in. Keep lots of cash but deploy it in cheap stocks, which are starting to appear.