Looking for investing ideas? Here’s your weekly digest of the Globe’s latest insights and analysis from the pros, stock tips, portfolio strategies plus what investors need to know for the week ahead.
Stock markets are completely out of touch with reality. Here’s what investors should do next
The S&P 500 hit a new all-time high last week, ignoring warnings of a softening global economy. The TSX is going along for the ride. There seems to be a disconnect from reality here. World growth continues to slow, future GDP projections are being cut, but the stock market ignores it all, Gordon Pape writes.
If you’re worried about a stock market setback, a shift of some assets to fixed income should be considered. Bonds have performed well so far this year; as of Nov. 1, the FTSE Canada Universe Bond Index was ahead 7.47 per cent year to date. As for stocks to hold in a crisis portfolio, you can find his list here.
John Heinzl: Why I’m ordering another serving of this fast-food dividend stock
Buying great companies whose shares have suffered a setback is a proven investing strategy, John Heinzl writes. That’s why he’s using more than half of Yield Hog Dividend Growth Portfolio cash balance to purchase additional shares of Restaurant Brands International.
Why has Restaurant Brands’ stock been plunging? Two words: Tim Hortons. You wouldn’t know it from the perennially long lineups at Canada’s favourite coffee and doughnut chain, but same-store sales slipped 1.4 per cent in the third quarter from a year earlier. But here’s the thing: Even as Tims is struggling, Restaurant Brands’ two other chains, Burger King and Popeyes Louisiana Kitchen, are killing it.
More from John Heinzl: More on tax-loss selling, DRIPs and dividend yields
The DIY investor’s guide to the best places for parking cash in an online broker account
The hottest-selling ETF last month was – get this – a vehicle for parking money in savings accounts, Rob Carrick writes. So was the fourth bestselling exchange-traded fund of October. Both stocks and bonds are having a knockout year, but investors are pouring money into ETFs that combine safety with returns that at least keep them even with inflation.
What’s missing is a way for investors to tell which products each online brokerage firm offers to clients who want to park cash. The Globe and Mail DIY Investing Guide to Parking Cash fills that need by offering a broker-by-broker look at two types of cash investments – high-interest savings ETFs and high-interest saving accounts packaged as mutual funds. As you’ll see here, there’s a lot of variation in who offers what.
More from Rob Carrick: This is the quick, clean way to get bonds in your portfolio
Shopify’s stock has doubled this year, but what’s it really worth?
TShopify is Canada’s tech darling and its huge stock market value - $45-billion - makes it the country’s 15th-largest public company, ahead of Canadian Pacific Railway and energy giant Canadian Natural Resources. Just about everyone agrees that Shopify is a great company with a solid strategy, David Milstead and David Berman write. The bulls on Shopify’s shares – and there are many – see a company with a best-in-class product, happy customers and an almost limitless opportunity as online commerce grows and Shopify expands its offerings to retailers.
Yet even though Shopify’s share price has declined by more than 25 per cent since its peak this past August, the stock remains very expensive. The company has never turned a profit, and isn’t expected to in 2020, so there’s no way to value Shopify on its earnings. And investors are paying more than $20 for every dollar of sales Shopify records – which is more than twice the price-to-sales multiple for many other well-known growing tech companies. Here’s what analysts are saying.
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A surprising source of dividend yields near 3%
An often overlooked benefit of investing in the Canadian stock market with index-tracking exchange-traded funds is a pretty good dividend yield, Rob Carrick writes. Canadian stock market indexes are dominated by dividend-paying blue chips. This explains why the indexes tracked by major Canadian equity ETFs offer dividend yields today that are very close to 3 per cent. Two quick examples: The iShares Core S&P/TSX Capped Composite Index ETF (XIC) has a trailing 12-month yield of 2.9 per cent, while the Vanguard FTSE Canada All Cap Index ETF (VCN) has a 12-month trailing yield of 2.8 per cent.
Both XIC and VCN distribute dividend income to investors on a quarterly basis, so they’re not as suitable as monthly-pay dividend ETFs for the income-focused investor. But if your investing goal is to build long-term wealth through total returns based on both dividends and share price gains, a mainstream Canadian equity ETF delivers. You also get dividend growth with these ETFs.
What investors need to know for the week ahead
Canadians will get an updated look at the national housing market in the week ahead, with existing home sales figures and MLS Home Price Index for October set for release on Friday. Other economic data on tap include: U.S. inflation figures for October (Wednesday); Canada’s new housing price index for September and U.S. producer price index for October (Thursday); Canada’s new motor vehicles sales for September and U.S. retail sales for October (Friday).
Note that bond markets in Canada and the United States are closed on Monday for Remembrance Day and Veterans Day.
It’s another busy week ahead for corporate earnings. Companies releasing their latest financial results include Loblaw, Walmart, Recipes Unlimited, Premium Brands Holdings, Aleafia Health, Aurora Cannabis, CannTrust Holdings, Green Organic Dutchman Holdings, Park Lawn, Stelco Holdings, Boyd Group Income Fund, Canada Goose, CAE, Brookfield Asset Management and Cineplex.