Canadian stocks rated by Iain Fraser

Being a Winner--Rule 3

Whatever undervalued stock you are considering for your portfolio,  before making a final decision, make sure that the chart pattern is either positive or neutral.

But should the chart be negative then it is a no go. Your advisor can get a technical opinion for you. If you want to learn how to read charts the best book that this observer  has seen is the one put out some years ago by The Canadian Securities Institute (the educational arm of the TSE, MSE and VSE).  The book is lucid and logical and was written by a 22 handicapper named  Fraser.

Price of oil topping out?

In 2004 our technical analysis of the Euro, when it was U.S. $135, the liklihood was that it would go down to $122 which it has.

Using the same technical model our view is that the price of oil is likely to top out in the next 9 days. One of the beneficiaries of lower oil prices would be Canadian Pacific, and in the U.S. Fedex, which is down from $102 to $80. In the DJIA there are several more stocks (Cat; Dis; Wmt ) that would benefit; to get a list of DJIA stocks and our ratings email us at fraserratings@yahoo.ca

5 Canadian Topicks

Our Report on our current five Canadian Topicks  is now available. Of the five picks three are the big Canadian  life insurance companies: Great West Lifeco; Manulife Financial and Sunlife Financial. 

All three of these stocks are undervalued and have great numbers. One of  amazing fertures of this industry is that just about everyone in the world who has some money is a prospect; Manulife, for example, is really moving ahead in Asia,and especially in  China.

If you would like to see our numbers on these three stocks, as well as the other two, just send us an email ( free, no obligation),at fraserratings@yahoo.ca

Report on Business-Heavy Lifters

On the front page of today's ROB there is a huge chart of the S&P/TSX  Composite Index and the  comment that yesterday, for the first time since October 2000 the Index closed above 10,000. They went on to say that since the bottom in October of 2002 the Index has gone up  4,221 points and the heavy lifters were Encana  (+264 points) followed by, in order, BNS, TD Bank, CNQ, Royal Bank, Manulife, CIBC, Suncor. These were the top 8 stocks cntributing to the 4,221 point rise.

And we had them all as topicks in the past 31 months!

Numbers 9 and 10 on the ROB List were  RIM and BMO and we had neither of them.

Not too bad for a 22 handicapper..

Being a winner -- Rule 2

Rule 2 is also quite straightforward; for the most part stay with undervalued stocks.

Of course, this brings up the question, what is an undervalued stock?

There are two kinds: the undervalued growth stock and the undervalued cyclical stock. On the growth side a stock is undervalued if the PEG ratio is less than 1.00.

For example, if the growth rate is 15 and the the P/E is 10 the stock is undervalued. For the cyclicals, we mainly use the Price to Book and the Cash Flow; if  the former is 1.5 and the latter is 4.5 the stock is undervalued. These are guidelines only; there is quite a lot of fine tuning which we will do later.

Top 5 Canadian Picks

Big week coming up. In our Report next week we will have, after much consideration, our 5 Canadian Topicks.

We are now in the 31st month of the bull market. Two years ago picking stocks was like shooting fish in a barrel but a sustained rise in many of our stocks has made them less attractive.

Our quest is for undervalued stocks. And we have found 5 of them that are substantially undervalued and even excessively undervalued! If you would like to see our 5 picks just email us at fraserratings@yahoo.ca

Being a Winner--Rule 1

The first rule to be a winning investor in this country is to have the first stock to go in your equity portfolio picked out of the bank sector. Any of the big bank stocks would do. The reason we pick the big banks is because they are bigger and older.

What you get with a bank stock is a company that has a long history of making more money and paying out more money in dividends.

Using the biggest of the banks here (Royal Bank) as an example, in the past 10 years the stock has gone from about $15 to $75 and the total dividend payout has been more than $13.00 per share. Enough said.

Sad week for Citigroup & JPM

In the past few days Citigroup has agreed to pay $2 Billion and J.P. Morgan $2.2 Billion by way of a settlement in the Enron fiasco. Egad, how did these great companies sink so low: anything for a buck.

But both have paid for their poor behaviour; both stocks are either sideways or down in the past 5 years.

In our latest Report #17 we explain why we believe Citigroup($47.41) is excessively undervalued. If you would like to see this Report just email us at fraserratings@yahoo.ca

Dow to go up 3100 points

"Our view is that the Dow Jones Industrial Average will go up 3100 points in the next 31 months" This is the heading on our current Report due out June 11/05.

We appreciate that many of you think the opposite and we are aware there are many difficulties; the twin deficits; Iraq; rates may go up; the economy may slow; oil may go up to $100. But 20 of the 30 Dow stocks are undervalued.    

In our current Report we also select three Dow stocks that are undervalued, are topicks and have chart patterns that suggest up moves of more than 30%. If you would like a free copy (no obligation) of this Report just email us at fraserratings@yahoo.ca   

Talisman and CNQ

The major action in the Toronto market is still in the oils.

In our Report of April 7/05 we had comments and showed charts for two great performers: TLM  which is about the same price, and CNQ which has moved up about 10%. But our observations in April are very much applicable today.

If you would like a copy of our April Report just email us at fraserratings@yahoo.ca