www.globeandmail.com

The Globe and Mail
leaftheglobeandmail

  2016 Reflections

BENJ GALLANDER, BEN STADELMANN, and PHILIP MACKELLAR

Monday December 19, 2016

It is the time of year to wrap up our past selections in a ribbon and bow, and see how smart they were. Or not. Man oh man; time does seem to pass more quickly.

Just over a year ago, Oprah Winfrey took a bite out of Weight Watchers at $6.49 (U.S.). The market loved that she joined the club and the stock price had jumped to almost $20 when we wrote about it before scaling further heights to $27.66. We opined that the valuations did not make sense and that this company should be avoided. Today, it trades at a much leaner $10.75.

Global X MSCI Greece ETF was next up. Trading at about $9 after last year's crisis, we thought Greece could find a measure of stability and that reforms were achievable. Some progress has been made and the economy has finally exited recession. The ETF is trading at about $7.60; our feeling is that there is lots of upside here.

Next, our column ventured into the world of penny stocks with Vasomedical, trading in the teenage penny price range. (We first bought it in September, 2014, at 17.1 cents.) Though revenues over the past year have jumped to the $73-million range from $57-million and the bottom line is now black, investors shy away from this health care equipment company and the stock price is now at a dozen pennies. CEO Dr. Jun Ma bought more in August and Benj followed his lead adding more this month at 11.3 cents.

Major Drilling was at $4.47 (Canadian) when it made its appearance in our column last January. Though the stock price can move pretty quickly, it has been a lovely winner, up over 40 percent. It would not surprise to see more in store.

Stereo headphone maker Koss was sitting at $1.80 (U.S.) last February when we tuned it in. It had a pretty darn good run, now at $2.30. The sell target is $7.24, which seems like miles away but does not compare with the $30 the stock crested a decade ago. Our feeling was that a corporation might decide to do a takeover here, given the lowly share count of 7.4 million. It's a long shot, but our record includes many of these types of winners.

We were also attracted to the largest maker of female condoms in the world, Female Health Co., which we bought in January at $1.36. That company has not done anything like projected as they merged with Aspen Park Pharmaceutical, a wannabee in the category of revenues. We hate this deal as the CEO at Aspen was a failure at his previous company, turning investors' hard dollars into folly. The merger was highly protested but passed with modifications at the end of the day. Benj is keeping the position while holding his nose.

Century Aluminum was trading in the $7 range when it was our topic in March. It has been exceedingly volatile but in this case, the fickle has been our friend. The recent price is $8.85, but lots more upside could be in store here.

In April, Flexible Solutions International, a Canadian company that trades on the New York Stock Exchange, was around 90 cents. It then began an explosive run, touching $2.41 but has since retraced to $1.30. There was lots of opportunity to take a fast, fat profit for those who were nimble. Another run upward would not surprise.

When Dollarama was at $90 (Canadian), it seemed overvalued to us. Not so fast, as this giant retailer is hopping around $100. Evidently selling “stuff” for a buck or four can be very darn profitable.

In mid-May, Pengrowth Energy had recovered to the $2 range after falling to 66 cents and skirting with bankruptcy. The assets sold paid down the debt dramatically and while the company has sat pretty quietly since, the viewpoint from here is that the stock price can move into the double digits.

U.S. regional banks have been major breadwinners for us and the feeling last June was that Civista Bancshares was not being given full credit for its operations, trading at $11.60 (U.S.). Evidently that was true as the stock price is now dancing just below $18.50, a lovely high-speed move.

Huge health care provider Extendicare was at $8.75 (Canadian) in September. Since then it has moved smartly to $10. The dividend of 5 percent plumps up the return. There is lots of room to run for this well-placed demographic position.

Lastly, Reitmans (Canada) Ltd. was dawdling under $6 in September after a healthy run from $4 and change. The momentum carried forward and broached $7 before retreating back to the $6 level. Recent quarterly results were excellent as the turnaround continues. The dividend of better than 3 percent seems secure.

While somewhat of a mixed bag as always, overall, the picks did well. Oh look, here comes 2017. With the major changes in global political dynamics, it promises to be a fascinating ride.


back