Copyright © 2022
Gal^Stad
Investments Inc.
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The
following is excepted from an article in The Toronto Star that appeared
on October 10, 1998.
Thousands
of Star readers have their fingers crossed after plunking down $100,000
in play money for The Star's latest Investment Challenge.
Their
deadline for entering was last Wednesday.
While
everyone waits for the first report on results later this month, here's
a sneak preview of the stocks our panel of four investment professionals
chose. With as many as 60,000 entrants, and so many possible combinations,
it's a mathematical certainty that several amateurs will do better than
the pros…
Benj Gallander, publisher of Contra the Heard, an
investor newsletter and author of The Uncommon Investor: A Contrarian's
Guide to Investing in the Stock Market.
His
picks include:
Miramar
Mining Corp., $30,000
Cypress Energy Inc. A, $30,000
Slocan Forest Products Ltd., $1,000
Forzani Group Ltd., $30,000
Devtek Corp. A, $ 1,000
Home Capital Group Inc. B, $8,000
Gallander's investment newsletter tracks the stocks he holds. He claims
a stellar average return of 27 percent per year over the past 10 years.
A
year ago Gallander warned on CBC Radio's This Morning that problems
in Asia would be more devastating than others were predicting at the
time. He was right. Last April, as markets started to slump, he told
readers of his newsletter he would not buy stocks until after tax-loss
selling season in December, unless there was a special situation.
"We have only purchased one stock since then,'' he said, except
of course with play money for the Investment Challenge.
Like Chabot, he's betting on a recovery in oil and gold with his choices
of Miramar and Cypress. "Miramar has a clean balance sheet and
has been at least quadruple its current price every year during the
last five."
"They have also sold 99,000 ounces of gold forward at an average
price of $409 (U.S.) until the year 2000. If people return to gold in
this uncertain economic time, this company could benefit handsomely."
"Cypress
is exceeding expectations even with the low oil prices, with revenues
up 213 percent in the first half."
"This
past summer, over $20 million was raised, significantly improving the
balance sheet. With winter approaching, it is a good bet oil prices
will go up. Plus, there is the OPEC wild card. Maybe they will finally
begin to really stick to targets."
"Lastly,
with the U.S. greenback being overvalued, a fall here could stimulate
oil prices."
"Slocan
has been making smart deals but they aren't reflected in the stock price.
They have also been cutting costs effectively. It is a certainty that
the forestry sector will turn around, but questionable whether it will
happen in the next three months, particularly with weak Asian demand."
"Slocan is an excellent long-term play that might jump sooner.
Forzani Group, a retailer, is in the midst of a very strong turnaround.
Sales were a record $125 million for the second quarter of the fiscal
year and up 21.3 percent in the first six weeks of the back-to-school
period."
"People
might batten down the hatches with the recent economic news, but Christmas
should do well by this company."
"Devtek, a maker of auto parts, has been getting its financial
house in order. The company's debt-to-equity ratio has been improving
and its book value has been increasing dramatically in percentage terms."
"If there is a slowdown in the automotive sector it would impact
Devtek's revenues substantially. Fortunately a new contract for $200
million signed in August should help future revenues."
"Home Capital Group is a mortgage lender that specializes in lending
to self-employed persons who may not qualify for a loan from a major
bank."
"The company has reported tremendous growth in earnings but the
stock got slammed when Canadian interest rates spiked to protect the
dollar. With a price-to-earnings ratio of about 6.5 and lower rates
likely, this one could take off again. Also, they are getting active
on the Internet."
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