This Christmas was very eventful, as many share certificates were found under the tree and exchanged between family members. What made things even better was that I was not the only person willing to consider all options, with many members of the household willing to “re-gift” or exchange their certificates as needed.
As is the case after every Christmas, there are things to keep, and then there are things to toss. In the case of share certificates, the keepers are easy to deal with, whereas the others need a little more attention to be sold at the best possible price. After all, selling stock is not a Boxing Day blowout event!
The first name that came out of my stocking was Pure Industrial Real Estate Trust (TSX:AAR.UN), called PIRET for short. The company has been a favourite for many years, as the yield is a rock-solid 4.6% and has the potential to increase in the coming year. What makes this industrial REIT even more attractive is the expansion into the United States, which will allow investors to benefit from the stronger U.S. dollar. After all, shares are priced in Canadian dollars.
Since I wanted to keep this name, I had to turn down a trade with my grandparents, who were after the share certificate. Their hope was to trade what Santa Claus brought them: shares of Bank of Nova Scotia (TSX:BNS)(NYSE:BNS).
In spite of being a fantastic name in the financial industry, the risk/reward profile is not very far out on the spectrum, which will translate to a high probability of making a reasonable return without hitting the ball out of the park. Had my grandparents sought out higher income, shares of Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) would have been a better alternative, conditional that they’re willing to tolerate a higher amount of volatility given the company’s capital-allocation strategy.
With the chance of additional acquisitions throughout 2018, shares of Bank of Nova Scotia may need to be tossed or traded for shares of Canadian Imperial Bank of Commerce, which has already completed a sizable U.S. wealth management acquisition.
The name received by my parents (who I can only assume were not on Santa’s “nice” list) Air Canada (TSX:AC)(TSX:AC.B). Given the lack of dividends and the high amount of leverage in what is traditionally a bad business, the share certificate was tossed as soon as the market opened on December 27.
In spite of many good things that have happened in the airline industry, the truth remains that it is still the “poster-boy” bad industry when considering Michael Porter’s five forces. In spite of a great decade, higher fuel prices and increased demands from the unionized employees will eventually lead to lower margins and make the industry vulnerable to an economic downturn.
The most disappointing part of Christmas to the youngsters in the room was the absence of any Bitcoin certificates. As a new industry or sector, it would seem that Santa Claus doesn’t know about the cryptocurrency. I guess we missed out.
Here’s hoping for a very happy new year!
