I am writing this in full Princess Jasmine attire. It was the only way my daughter said she would let me get on with my work this morning. The things we do for our kids. And peace.
WATCH: Long time hedge fund manager JF Tardif at Timelo Investment Management is cautious with markets at all time highs. He’s got a very high short position and isn’t chasing momentum. He’s buying deep value in telco and real estate. While many say energy stocks offer value, he currently owns zero oil & gas producers. Find out why in our latest episode packed with actionable stock ideas.
Derailed: Shares of CN Rail are falling 4.5% in the pre-market after the railway operator cut its profit growth forecast for the third year in a row. CN Rail now sees profit growing in the mid-to-high single digit range down from 10-15%. The company is blaming tariff headwinds and a stronger Canadian dollar. Not a good day to be a shareholder (me) as many analysts say the stock is destined for purgatory after the results. Not only has volume growth been lackluster, but recent M&A chatter is likely to leave CN Rail on the outside looking in. Many analysts are having a hard time finding a catalyst. I’ve counted at least three downgrades this morning basically because of that. “We see few reasons for the stock to move meaningfully higher in the short-to-midterm,” wrote National Bank’s Cameron Doerksen in his downgrade this morning, “With U.S. railroad merger speculation growing, we expect investor interest in the sector to be more focused on the U.S. peer group with funds potentially flowing out of CN as a result,” said Doerksen. This is threatening to become the next Pfizer in my portfolio (lured in by value). There are others hanging on like me. “We maintain our Buy rating, because we find it hard to downgrade CN when it trades at such a wide discount vs. the peers and just ~5% above its 52-week low,” wrote TD’s Cherilyn Radbourne.
Leave a message: Watch shares of Rogers at the open after the telecom beat sales and profit expectations in the quarter. Rogers increased it’s total service revenue forecast, but maintained it’s overall profit growth forecast. Capital expenditures are now expected to come in at the lower end of their forecast so that could set up the company to exceed expectations for the future. They added 35,000 new wireless customers which was higher than consensus but down sharply from the 162,000 added last year. This reflects reduced immigration. JF Tardif said he is buying Rogers and BCE here. “”The day the price war is over, it’s probably time to buy them, and we believe the price war is over,” he said on the podcast. Analysts echo this sentiment. “While financial results do clearly show the impact from significant pricing pressures,” wrote Scotia’s Maher Yaghi in a note about the results this morning, “We believe recent price ups which we saw since early June provide a more positive backdrop for the industry.”
Wrong number: Shares of AT&T on the other hand are down 3.5% in the pre-market despite stronger than expected financial results. On one hand, they added more subscribers than expected, profit and sales were also higher than expected. But on the other hand, profit in mobility was less than expected and it reduced its profit growth forecast. This has investors nervous about the kind of promotions the company is resorting to in order to drive subscriber growth. If price competition is coming to America (the way it has been for Canada) we know that is a tough environment for the stocks to do well. Keep in mind the stock is up nearly 60% over the past year when you include dividends.
T-pain: Texas Instruments is plunging 10% after a cautious outlook for the upcoming quarter. The chipmaker is baking in tariffs that have crimped some of its end customers like car companies and factory equipment makers. Sales grew 16% in the quarter but the forecast implies 11% growth going forward. Company executives also appeared uncertain as to the tariff drag noting that some of the strength in the quarter could have been from companies ordering before tariffs hit thereby pulling forward demand. Given the stocks run up so far in 2025, the bar was high and any disappointment is being punished.
