Canadian investors who made it through a tumultuous 2022 face further uncertainty in the year ahead amid increased recession risk, higher interest rates, persistent inflation, a jittery stock market and a plummeting real estate market.
Investment professionals and personal finance experts say the easiest way to grow your money this year is to keep things simple.
It’s a good time to invest in the stock market now that prices have come down quite a bit, especially for people with time on their side, said investment expert and author of “The Sassy Investor” Michelle Hung.
“Investing in some broad market index funds like the S&P 500 index, S&P/TSX composite index, and high-quality dividend funds are good for money growth in the long term,” she said.
“There is some good value out there with companies that pay steady dividends and have modest growth potential and are less volatile than, for example, technology companies. Canadian bank stocks fall into that category. They’re always good to have in your portfolio.”
Hung also suggests including some safer investment options like guaranteed investment certificates (GICs). The two main features of every GIC is the term and the interest rate.
“Some GICs are paying upwards of five per cent per year,” she said.
Hung added that with higher interest rates, fixed-income products, such as bonds, are better now as an investment option than at any time over the last decade.
When it comes to where stock markets are headed, Carol Schleif, chief investment officer at BMO Family Office expects them to move from jittery to range-bound as investors settle into the new normal of higher interest rates. A range-bound market is when the price of financial assets like stocks or commodities remain in a relatively tight range for an extended period of time.
“There are ways to balance the risks of investing in stocks. Be diversified by market capitalization, locale and industry. Watch your costs and turnover. Adopt a long-term attitude and use dollar-cost averaging and rebalancing to your advantage,” she said.
Being in cash right now isn’t a bad idea, Schleif added.
“Cash is no longer trash. Many advisors are weaving cash holdings into asset allocation recommendations — when it historically hasn’t been considered an asset class in its own right. Investors can get paid to be patient,” she said.
Cash, or liquid funds, in an investment portfolio gives you wiggle room during times of financial uncertainty.
When thinking about the stock market as a vehicle to build wealth, Diana Orlic, portfolio manager and wealth advisor at Richardson Wealth, said it is important to consider what stage of life you’re in.
“If you’re young, you actually want terrible markets, because you’re the one that is buying, and you want to buy low,” she said.
“If you’re established and you have a good net worth, I think this is the perfect time right now to review your portfolio. If you have gains, take them — take your winners. If there are things that you’re uncomfortable with, now is the time to do a tune-up.”
Orlic said she prefers the Canadian markets for commodities, materials and utilities stocks and the U.S. markets for financials and healthcare at the moment.
Technology stocks got pummeled in 2022, and while Orlic doesn’t expect them to be the leaders in the next leg up in the market, she isn’t negative on the sector.
“I do think that there’s still room for growth there. But will (tech) perform like the previous years? I think that remains to be seen.”
For people looking for less conventional investment opportunities, The Sassy Investor’s Hung said the crypto market is still worth taking a look at as popular cryptocurrencies like bitcoin and ethereum try to regain their footing after a challenging 2022.
“I do have my eye on cryptocurrency now that it’s so out of favour. It’s not for everyone, but for those who can stomach higher risks, it’s an asset class to keep an eye out on,” she said.
Real estate is a good investment as long as you’re not putting all or most of your eggs into the basket, Richardson Wealth’s Orlic said.
“If all your assets are in real estate, the trouble could be if some of the investment properties aren’t doing well or people aren’t paying. Do you have the cash flow to sustain it during bad times? Do you have the cash to sustain it if interest rates go up and mortgage costs go up?”
BMO’s Schleif points to timber, mineral rights, farmland, wine, and art as alternative investments worth considering, though getting good guidance on selecting the right alternative investments and understanding their tax implications is crucial, she explained.
When seeking out investment opportunities, Parween Mander, financial counsellor and money coach, is urging people not to be impulsive amid all of the noise that really ticked up during the COVID-19 pandemic era.
“I think we really need to be mindful of the role of social media and personal finance advice that’s encouraging people to take advantage of the current real estate and stock markets and invest because things are cheaper,” she said.
“Advice like buying real estate to flip into Airbnb, crypto, and stock picking is very dangerous advice that some people may think is right for them because it’s a ‘great time to invest.”‘
It is especially important during uncertain times to be smart with your money, Mander said, and to prioritize debt resilience and ultimately ensure your financial foundation is secure before looking to build on it.
This report by The Canadian Press was first published Jan. 3, 2022.
Zacks Investment Ideas feature highlights: Alphabet, Tesla, Shopify, Amazon and Palo Alto
For Immediate Release
Chicago, IL – February 2, 2023 – Today, Zacks Investment Ideas feature highlights Alphabet GOOGL, Tesla TSLA, Shopify SHOP, Amazon AMZN and Palo Alto Networks PANW.
Which of These Stocks Has Been the Best Buy, Post-Split?
Stock splits have been a regular occurrence in the market over the last several years, with many companies aiming to boost liquidity within shares and knock down barriers for potential investors.
Of course, it’s important to remember that a split doesn’t directly impact a company’s financial standing or performance.
In 2022, several companies performed splits, including Alphabet, Tesla, Shopify, Amazon and Palo Alto Networks. Below is a chart illustrating the performance of all five stocks over the last year, with the S&P 500 blended in as a benchmark.
As we can see, PANW shares have been the best performers over the last year, the only to outperform the general market.
However, which has turned in a better performance post-split? Let’s take a closer look.
We’re all familiar with Tesla, which has revolutionized the EV (electric vehicle) industry. It’s been one of the best-performing stocks over the last decade, quickly becoming a favorite among investors.
Earlier in June of 2022, the mega-popular EV manufacturer announced that its board approved a three-for-one stock split; shares began trading on a split-adjusted basis on August 25th, 2022.
Since the split, Tesla shares have lost roughly 40% in value, widely underperforming relative to the S&P 500.
Palo Alto Networks
Palo Alto Networks offers network security solutions to enterprises, service providers, and government entities worldwide.
PANW’s three-for-one stock split in mid-September seemingly flew under the radar. The company’s shares started trading on a split-adjusted basis on September 14th, 2022.
Following the split, PANW shares have struggled to gain traction, down roughly 15% compared to the S&P 500’s 3.3% gain.
Shopify provides a multi-tenant, cloud-based, multi-channel e-commerce platform for small and medium-sized businesses.
SHOP shares started trading on a split-adjusted basis on June 29th, 2022; the company performed a 10-for-1 split.
Impressively, Shopify shares have soared for a 50% gain since the split, crushing the general market’s performance.
Alphabet has evolved from primarily being a search engine into a company with operations in cloud computing, ad-based video and music streaming, autonomous vehicles, and more.
Last February, the tech titan announced a 20-for-1 split, and investors cheered on the news – GOOGL shares climbed 7% the day following the announcement. Shares started trading on a split-adjusted basis on July 18th, 2022.
Alphabet shares have sailed through challenging waters since the split, down 10% and lagging behind the S&P 500.
Amazon has evolved into an e-commerce giant with global operations. The company also enjoys a dominant position within the cloud computing space with its Amazon Web Services (AWS) operations.
AMZN’s 20-for-1 split was a bit of a surprise, as it was the company’s first split since 1999. Shares started trading on a split-adjusted basis on June 6th, 2022.
Following the split, Amazon shares have lost roughly 18% in value, well off the general market’s performance.
Stock splits are typically exciting announcements that investors can receive, with companies aiming to boost liquidity within shares.
Interestingly enough, only Shopify shares reside in the green post-split of the five listed.
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$13 million investment in Campbellford Memorial Hospital
The Campbellford Memorial Hospital will be receiving a $13 million investment from the Ontario Government to address infrastructure concerns.
The announcement was made at the hospital by Northumberland—Peterborough South MPP David Piccini.
The $13 million is broken down as follows:
- $9,639,900 will be going to CMH as one-time capital funding to address the HVAC and generator
- $1,874,929 for reimbursement of CMH’s COVID-19-related capital expenses
- $771,797 in COVID-19 incremental operating funding
- up to $600,000 in one-time funding to support the hospital’s in-year financial and operating pressures
- $163,600 in pandemic prevention and containment funding
- $81,132 through the Health Infrastructure Renewal Fund
- $46,884 in health human resources funding.
Interim President and CEO Eric Hanna welcomed the news, saying much needs to be done about the HVAC and generator.
At the announcement, Hanna spoke of the issues with the generator.
“I’ve got the wee little generator up at the lake and then I’m thinking well, everything should be going well at the hospital,” Hanna told the audience in attendance.
“You get a call from the person in charge who says, ‘Guess what Eric? Generator didn’t start. Oh, so what does that mean? There’s no power in the hospital.’ That’s happened a couple of times in the past year and the generator is over 30 years old.”
Hanna says the solution was not as easy as replacing the generator.
“You can go buy the generator and that may be about a million dollars. But then when we found out afterwards, we came to hook up the new generator to the electrical distribution system and said it won’t work with that because your electrical distribution system is 1956. You can’t plug this generator into that. So now we’re putting close to $5 million into a whole electrical distribution system so the generator will work. It’s part of that ongoing thing and that’s why these costs continue to go up.”
The HVAC system was also something addressed by Hanna.
“It’s a contract close to $7 million to replace that. This wing, for example. There’s no fresh air in this wing. It hasn’t worked in here for 15 years. So now this is administrative areas and the concern was that in some of the patient carriers, it wasn’t working either. So – having those discussions with David (Piccini) and saying what we have to do to correct this.”
Chile’s Enap Set to Slash Debt Burden That Weighed on Investment
(Bloomberg) — Enap, Chile’s state oil and gas company, plans to use near-record earnings to slash its debt burden, while increasing investment in its refineries and in exploration and production.
The company aims to reduce its debt load to about $3 billion “medium term” from the current $4.3 billion, Chief Executive Officer Julio Friedmann said in an interview. Plans include a bond sale in the first half of this year to refinance some securities.
The improved financial position — with 2022 profit surging to $575 million — comes after Enap’s oil and gas operations in Egypt, Ecuador and Argentina got a boost from high crude prices, while healthy international refining margins benefited plants in Chile. Those trends are expected to extend into this year and next, enabling the company to pre-pay some short-term obligations. About half of the current debt burden matures in the next three years.
“We are going to issue bonds,” the MIT-trained executive said Wednesday from the Aconcagua refinery in central Chile. “We are closely evaluating the local and international markets.”
At the same time, Friedmann, who took the reins at Enap in November, plans to increase capital expenditure to about $700 million this year from $550 million last year.
The increase comes after underinvestment in the past few years because of Covid restrictions and the heavy debt load. Spending will focus on making treatment processes cleaner and upgrading infrastructure, as well as a more aggressive approach to increasing gas reserves in the far south of the country, he said.
Enap plans to expand in both liquefied petroleum gas and natural gas markets in Chile, focusing on the wholesale business and eventually selling directly to large-scale consumers such as mines. Organizational changes to enable the expansion will be announced soon. There are no plans to enter the final distribution business, Friedmann said. The company wants to supply more gas to southern cities as a way of replacing dirtier fuels such as wood and diesel.
Enap and its partners are also preparing pipelines and a refinery near Concepcion to start receiving crude from Argentina’s Neuquen basin sometime this year in an arrangement that could supply as much as 30% of its needs.
While there’s plenty of potential do collaborate more with energy-rich Argentina, particularly in the Magallanes area, that would require greater long-term visibility on supplies from the neighboring country, Friedmann said.
He sees a role for Enap in the development of green hydrogen in Chile. It’s in talks with three companies to enable its facilities in Magallanes to be used to receive all the wind turbines, electrolyzers and other equipment that will be needed to make the clean fuel. Enap is also evaluating its own small pilot plants and will consider whether to take up options to enter other green hydrogen projects as an equity partner.
While the company will maintain its focus on meeting rising demand for traditional fuels, it anticipates new regulation that will require lower emissions. It’s also looking closely at clean-fuel options for aviation, Friedmann said.
(Adds clean fuel plans in last paragraph. I previous version corrected spelling of CEO’s surname.)
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