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Investment Ideas Apple looks to put the final nail in conventional TV’s coffin, a breakout for Enbridge, and the best global equity ETFs

Apple Inc. is set to announce its new foray into television next week in a move that is likely to exacerbate a trend towards the end of TV as we knew it in the 1980s and 1990s.

Most investors are aware that over the top (OTT) programming services like Netflix and Crave TV are cutting into conventional television ratings. The speed at which ‘Linear TV is dying’ , however, has been obscured by demographic factors – it’s actually happening far faster than overall statistics imply.

The Financial Times’s Alphaville site (free with registration, link above), detailed research showing that while Americans over 55 years old are watching roughly the same amount of television as always, viewership among 18-49 year olds is collapsing. In 2018 alone, these younger adults watched 14 per cent less of the top 20 cable networks than in 2017.

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The 18-49 year old age group – those in their peak earnings and spending years – is the most targeted by advertisers. Ad revenue drives conventional television company revenues so, as young adults desert the medium, so does advertising and industry revenues.

South of the border, the negative trends are so pervasive that in May of 2018, Verizon Communications Inc.’s then-CEO Lowell McAdam stated , “I think the linear [TV] model is dead”.

Domestic broadcasters may have been more successful in maintaining views thanks to our typically Canadian oligopolistic structure. CMF Trends, the online site for the Canadian Media Fund, wrote, “there’s a concentrated ownership of teams, specialty sports channels, and fixed and wireless distribution. Therefore, [industry expert Jeff] Fan points out, there’s “a larger vested interest to protect the traditional linear video subscriber base and ARPU [average revenue per user].””

Despite these efforts to protect viewership, however, CMF Trends also noted, “Forty-five per cent of Canadians under 30 are either cord cutters, or those who had cable and then stopped subscribing, or cord nevers - those who never had a cable subscription in the first place” .

Apple is notoriously secretive as a company so we don’t know what to expect in its new programming offering. We do know that Walt Disney Corp. will soon offer a new streaming media service called Disney + which will almost certainly drag more viewers from conventional television.

The investment implications of these trends are wide reaching. Few Canadians under the age of 50 have the patience to wait for a certain day and time to watch anything, so existing broadcasters will have to steadily re-shape their business models.

Peripherally, the declining importance of conventional television is one of the reasons I’m so interested in esports and gaming as a potential investment. The time that used to be spent watching M*A*S*H is now used for gaming, particularly for young males.

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-- Scott Barlow, Globe and Mail market strategist

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Stocks to ponder

Enbridge Inc. (ENB-T). This security appeared on the positive breakouts list (stocks with positive price momentum) at the beginning of the month. Year-to-date, the share price is up over 15 per cent and analysts are anticipating further gains of over 13 per cent. In addition, the company has an attractive dividend yield, currently over 6 per cent. Patient investors may be rewarded. By November, all permits for the Line 3 replacement project may be received – a potential catalyst for the stock. The security has 16 buy recommendations. Jennifer Dowty reports (for subscribers).

Charlotte’s Web Holdings Inc. Year-to-date, the share price is up 50 per cent and as a result, the share price may need to digest these gains before climbing higher. There are six analysts that cover this company and all six analysts have ‘buy’ calls. In January, former Coca-Cola executive joined the firm to help spearhead the company’s growth strategy. Jennifer Dowty profiles the stock (for subscribers). Also see: Canada’s biggest pot ETF adds Charlotte’s Web to holdings

Northview Apartment REIT Even after a 15 per cent jump so far in 2019, this REIT remains attractive, says Gordon Pape.

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The Rundown

Rob Carrick’s 2019 ETF Buyer’s Guide: Best global equity funds

Global funds are where we find the ETF industry going to extremes to be all things to all investors. There isn’t a permutation of investing outside Canada that you can’t cover with exchange-traded funds. There are ETFs that give you the world outside Canada, and that exclude both Canada and the United States while giving you everything else. Beyond that, you can get funds with and without currency hedging to screen out the impact of fluctuations in the value of the dollar, that add emerging markets to the usual pool of developed countries and that add small and medium stocks to the usual selection of big companies. Rob Carrick’s latest edition of the ETF Buyer’s Guide looks at international stocks (for subscribers).

Three emerging markets Canadian investors should ponder

There was a time, back in the 1990s, when emerging markets all seemed to be working from the same playbook. But these days, many EM countries are busy carving out their own path to the future while rewriting an outdated script. Still, the perception that EM is one homogeneous asset class persists despite its evolution as a diverse group of countries with different opportunities, as well as risks and drivers. EM economies are evolving and many are stepping up the value-chain, each with their own economic cycle, political realities and market structure. And while a number of macroeconomic forces sideswiped EM markets in 2018, many of those headwinds are now shifting to tailwinds. Not only are valuations in EM favourable, but growth in gross domestic product is poised to outstrip that of developed markets in 2019. The upshot? There are lots of reasons for optimism as we look to EM this year. Yet, investors would do well to pick their spots, balancing the opportunities against the risks while investing in disparate EM countries. Regina Chi from AGF looks at three EM markets that are worth a look (for subscribers).

A stock-picking strategy with stellar returns and stomach-churning volatility

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Explore the good, the bad and the ugly of value investing before adopting it. It’s easy to learn about its good side, but the bad and the ugly aren’t always advertised. A simple method highlights a few of value investing’s strong and weak points. Norman Rothery explains.

Beware the pitch that stocks and bonds are not enough for your portfolio

Here’s a strong sign that the investment business is worried about a big market decline. There’s growing talk from asset managers these days about the benefits of liquid alternatives as a complement to a basic portfolio of stocks and bonds. Liquid alts include commodities, real estate, infrastructure and derivatives. The pitch for adding them to a portfolio is to improve returns while managing risk. Rob Carrick is skeptical.

Cashless society series:

In a digital world, parents are rethinking the way they teach their children about money

At a time when kids flash plastic at the mall, buy phone apps with fingerprint technology and swipe city transit cards to ride the bus to school, one might be forgiven for thinking the coin-jingling Tooth Fairy seems a bit out of touch. That was Ottawa special-education high-school teacher Sue Carkner’s thinking too when she began to re-evaluate how she and her husband, Steve, doled out allowance to their children. Back when they were preschoolers, she would give each child a loonie and a quarter, and take them to a local dollar store to practice buying things and getting change. And although her teens, now 13, 15 and 18, still receive some of their allowance as cash today, from the time they hit middle school, a portion of that money has been transferred into their bank accounts. Kira Vermond reports.

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Others (for subscribers)

Goldman Sachs answers ‘Where to invest now?’ with 30 stock picks

‘When it comes to the loonie, sell strength at every opportunity’: Analysts cut their Canadian dollar forecasts

Monday’s Insider Report: Stocks this billionaire businessman is buying and selling

Monday’s analyst upgrades and downgrades

Tuesday’s Insider Report: President at this ‘Big 5’ bank sells over US$4.9-million worth of stock

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Tuesday’s analyst upgrades and downgrades

Fifteen lesser known Canadian value stocks

Contra Guys: Why we’re still bullish on battered Stuart Olson stock

Others (for everyone)

The Globe’s stars and dogs for last week

Ask Globe Investor

Question: My question is about Tax Free Savings Accounts and selling a stock at a loss. Suppose I purchase shares in a company for a total of $5,000. I then sell the stock for $2,500 for a loss of $2,500. But I don’t take the money out of the TFSA. Can I contribute $2,500 right way back into my TFSA? Or do I have to wait till the following year and my limit will be increased by $2,500 due to the loss?

Answer: Sorry to be the bearer of bad news, but losses on securities within a Tax-Free Savings Account are not recoverable and do not add to your contribution limit. If you had withdrawn the $5,000 directly and then bought the stock, you would have been able to recontribute the $5,000 in the following year. But under the scenario you describe, that $2,500 loss is simply gone.

--Gordon Pape

Do you have a question for Globe Investor? Send it our way via this form. Questions and answers will be edited for length.

What’s up in the days ahead

John Heinzl explains why investors craving income shouldn’t satisfy their hunger with Pizza Pizza.

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Compiled by Gillian Livingston and Darcy Keith

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