We conclude our three part Year-End Marketplace Roundtable with a bottom line approach - what are you buying or selling? You can review part 1 here and part 2 here to get a background on our authors, then dive in to see where they're finding opportunities.
Seeking Alpha: What's one of your favorite ideas for 2017, and, in a sentence or two, why?
Chris DeMuth Jr.: BNCCORP (OTCQX:BNCC) is one of my favorite ideas for 2017. As we described in Time For BNCC To Review Alternatives, now would be the perfect time for the board and management to consider their best route to maximize shareholder value. There is massive upside in a deal. For updates on this and similar opportunities, please join us at Sifting the World.
Alexander Poulos: KraftHeinz (NASDAQ:KHC) will announce an acquisition in 2017 that will push their share price higher. KHC is a consolidator, with much higher aspirations. As long as interest rates remain low, expect M&A from KHC every two years. The out of favor consumer staples sector may surprise many if animal spirits break out as a wave of M&A breaks out.
Rida Morwa: We cater to both conservative investors such as retirees, and to more aggressive income investors, and offer each different exposure, depending on the risk profile. For example, for conservative investors, we tend to recommend Baby Bonds and diversified exchange products (such as ETF, CEFs and ETNs) which inherently carry less risk and lower price volatility. For yield-hungry investors, we take an opportunistic approach for stocks and securities that offer both very high-yields and the potential for long-term capital gains. With my two favorite sectors for 2017 being Property REITs and Midstream Oil and Gas MLPs, 2 of my best picks for 2017 are 1) Independence Realty Trust (NYSEMKT:IRT) - Yield 8.4%. A growing Residential REIT set to benefit from rising home price and increased rental income, and 2) InfraCap MLP ETF (NYSEARCA:AMZA) - Yield 19%. AMZA is a diversified and unique midstream oil & gas ETF in the fact that it is actively managed. The managers use an opportunistic approach to investing in order to boost yield, in addition to using covered-calls. See my recent article.
Elazar Advisors, LLC: Oil. Trade wars, closing of borders, OPEC, and either rhetoric or the risk of actual war can drive oil. With a new tough talking and likely tough acting US administration, well, tough talk and tough action is usually a bullish oil story.
Downtown Investment Advisory: Exchange Traded Debt with maturities of seven years or less remains an underfollowed and therefore undervalued area of the fixed income market. I continue to find solid 6%-7% yields in various issues that do not expose investors to elevated interest rate risk. I continue to accumulate shares in Whitehorse Finance bonds (Ticker: WHFBL), which I recommended in October 2015.
Donald van Deventer: Hedging your future cash needs with your investments, because ignoring them is like driving blindfolded.
Value Digger: My favorite pick for 2017 is Chinook Energy (OTCPK:CNKEF), as presented in my article here. Amid an ongoing strategic review process, Chinook Energy is a takeover target and the cheapest Montney producer with a stellar balance sheet pro-forma the Craft spin-off, and therefore, I'm a firm believer that it could double or even triple in 2017.
Esekla: In keeping with my last answer from the previous roundtable, most of my Short Side research has been focused on market hedges and measuring the time until they become full-blown shorts. However, Vuzix (NASDAQ:VUZI) is a short idea that I introduced on the Short Side a month ago. Since then, the stock has gotten nothing positive press, yet it has dropped 25% due to market dynamics and corporate strategy points that others have overlooked and misinterpreted. The real proof will come in the months after CES 2017, though, when I may submit a public article showing why the situation should play out very much like Camtek (NASDAQ:CAMT) did. I can never get other Contributors to take my bets, but I challenge any who wish to argue the point to wager whatever AlphaDollars they might have with me.
ONeil Trader: Amicus Therapeutics (NASDAQ:FOLD). The stock lost almost half of its value in recent weeks and 2017 is setting up to be a potentially transformative year for the company with the phase 3 trial results of Zorblisa in Epidermolysis Bullosa, which is a $500 million to $1 billion a year opportunity for Amicus. At this point, the company is trading near fair value for Galafold ex-U.S. (the product is approved in the EU) and little or no value has been assigned to Zorblisa, which produces an asymmetric risk/reward investment opportunity.
Canadian Dividend Growth Investor: Algonquin Power & Utilities Corp [TSX:AQN](NYSE:AQN) just got listed on the NYSE in November. So, few investors know about the North American utility. Algonquin yields 5% and plans to invest C$9.7 billion from 2017 through 2021, which will support an annualized dividend growth of 10%. The Empire District Electric (NYSE:EDE) acquisition, which should close in early 2017, is 35% of the growth plan. And Empire will double Algonquin's installed capacity to more than 2,700 MW and will increase the number of its distribution customers by nearly 40% to over 780,000.
Ruerd Heeg: I think higher oil prices are likely in 2017. If you like to bet on a higher oil price then CosmoSteel Holdings (SGX:B9S) is a great idea. This net-net is very cheap and insiders have taken advantage of the low share price.
Wall Street Titan: My favorite idea for 2017 is the same as my top pick for 2016, Athersys Inc. (NASDAQ:ATHX), a leading off-the-shelf stem cell therapy pioneer. In November 2014, Japan put in place new laws that dramatically streamlined the approval process for stem cell therapies and lowered the threshold for reimbursable approval. Athersys partner, Healios KK, will commence a fully funded pivotal stroke trial in Japan in January 2017. I also expect Athersys to sign a new global partnership for their stem cell stroke therapy outside of Japan in the first half of 2017. Those who want to take a deep dive into the scientific evidence behind their stroke therapy can read my analysis here.
Michael Boyd: I'll keep my industrial and basic materials picks close to the vest, but I really like Federated Investors (NYSE:FII) as a financials play. Federated Investors is an asset manager, but what makes them unique in the space is their sizeable AUM held within their money market products. Unlike banks which will rely on a steepening of the yield curve to drive profitability (which may not necessarily happen as the Fed raises rates), Federated Investors just needs the bump in short-term rates to see higher profit. Management is excellent, and that team has a history of rewarding shareholders. It really is a great company that has fallen by the wayside in recent years.
Richard Lejeune: I added Jernigan Capital (NYSE:JCAP) as my top equity pick at $18.57 on 11/22/2016. It has already traded higher to $21.97, but still has plenty of room left to the upside for my $42 price target. See my recent article for more details on JCAP. This a rare high yield growth stock. It is cheap at 7X 2017 earning and is generating 20% returns on capital.
Fredrik Arnold: Monthly pay dividend stocks are becoming the new gold-standard for reliability and transparency in investing. If compound interest is a wonderful thing, then twelve times per year dividends from solid businesses are more-so.
J Mintzmyer: My favorite idea for 2017 is Teekay Corporation (NYSE:TK), there are a number of improving catalysts, but the primary focus is on their limited partner subsidiary: Teekay LNG Partners (NYSE:TGP). We recently brought this one public with a price target of $18/sh, read the attached 15 page report for more info (link to report).
Andrew Hecht: Short gold with a trailing stop.
Alpha Gen Capital: My best idea is MCI, a closed-end fund. It is trading near NAV which is rare for this fund. The fund has a 45 year track record and has returned over 12.6% annually.
The Value Pendulum: My favorite idea for 2017 is Hong Kong-listed COSCO International Holdings Ltd. (OTCPK:CHDGF) (517 HK), one of the largest shipping services provider in China that also trades on an OTC basis in the U.S. It sports a 3% dividend yield and trades at approximately 0.7x P/B with net cash of approximately HK$6.2 billion slightly exceeding its current market capitalization. It is cheap as investors have put COSCO International in the same category as other shipping stocks and ignored its ship trading agency and insurance brokerage segments which are asset-light, high-margin businesses with commission-based revenue models that are relatively less affected by short-term fluctuations in freight rates or global macroeconomic environment. More importantly, COSCO International's significant net cash position of HK$6.2 billion offers upside optionality from future value-accretive acquisitions. One catalyst is news that China's two biggest state-owned shipping companies, China COSCO Shipping Corporation (COSCO International's ultimate parent) and China Ocean Shipping (Group) Company plan to merge 11 shipbuilding yards into a single entity, which could eventually lead to a re-organization of the various segments within this enlarged entity, including the potential injection of non-listed entities and businesses into COSCO International.
Itinerant: Keep enough powder dry to benefit from the bottom in gold prices. And buy Stillwater (SWC) when the Sibanye (NYSE:SBGL) deal falls apart.
Ranjit Thomas, CFA: I would say the sectors and stocks left behind in the Trump rally. I like Amgen (NASDAQ:AMGN) in the pharma space, and the hospital operator HCA Holdings (NYSE:HCA). Both should continue to do well with an aging population and overstated risks.
Eric Parnell, CFA: Pharmaceutical and medical device stocks. They offer a great deal to like including high financial quality, strong earnings predictability, favorable growth prospects, attractive value, and currently negative sentiment due to concerns over drug pricing. Many of these names also stand to benefit from prospective corporate tax reform.
Bhavneesh Sharma: Long Juno Therapeutics (NASDAQ:JUNO) is one of my favorite long investing ideas for 2017. At current price, the common stock in this company is a compelling buy. JCAR-017 has shown promise and was granted FDA Breakthrough therapy designation in relapsed/refractory non-Hodgkin's Lymphoma. Juno is also developing 'armored' CARs and is developing new technologies to increase the safety of its CAR-T therapy. It is also developing TCR therapies in solid tumors.
William Koldus, CFA, CAIA: Chesapeake Energy (NYSE:CHK), which I have written multiple public articles on, including an entry in my "Too Cheap To Ignore" series of articles earlier in 2016, and whose options I have discussed at length with members of "The Contrarian", remains positioned, and poised to substantially outperform in 2017, as the cumulative lack of supply side investment in natural gas has tilted the supply/demand balance in-favor of the bullishly positioned investors.
Richard Berger: Chase the market with cash covered puts using strike prices based on fundmental value in high quality companies. This will generate superior income and yield while reducing (but never eliminating) market risk.
Michael Markowski: My top idea for 2017, is Live Ventures, Inc., (NASDAQ:LIVE). The impetus for my discovering Live Ventures was the crash of the micro-cap market in 2016 to the lowest level that I have witnessed in 40 years. I have been on a hunt to find and recommend the top 100 micro-caps as soon as possible. LIVE ranks as my best ever micro-cap find:
- Shares extremely liquid for a micro-cap.
- Very dynamic 33 year old CEO who stepped in to turn around company has since acquired 40% of its shares outstanding.
- Based on my free cash flow analysis shares are insanely undervalued.
- Diversified holding company business model identical to Berkshire Hathaway’s (NYSE:BRK.B)
- Grew by 100% for fiscal 2016 and will continue to grow at 50% to 100%.
Thanks once more to our panelists for their participation. If you'd like to check out their work or their services, please check out the list below:
- Chris DeMuth Jr., author of Sifting the World
- Alexander Poulos, author of Undervalued Gems
- Rida Morwa, author of High Dividend Opportunities
- Elazar Advisors, LLC, author of Pro Trader
- Downtown Investment Advisory, author of The High-Yield Bond Investor
- Donald R. van Deventer, author of Corporate Bond Investor
- Value Digger, author of A Fundamental Investor's Stock Club
- Esekla, author of Esekla's Short Side
- ONeil Trader, author of Growth Stock Forum
- Canadian Dividend Growth Investor, author of Canadian Dividend Growth Investor Premium
- Ruerd Heeg, author of Trading Global Deep Value Stocks
- Wall Street Titan, author of Stem Cell Sector News And Analysis
- Fred Piard, author of Global Household Index
- Michael Boyd, author of Industrial Insights
- Richard Lejeune, author of Panick Value Research Report
- Fredrik Arnold, author of The Dividend Dog Catcher
- J Mintzmyer, author of Value Investor's Edge
- Andrew Hecht, author of Hecht Commodity Report
- Alpha Gen Capital, author of Yield Hunting: Alternative Income Opportunities
- The Value Pendulum, author of Asia/U.S. Deep-Value Wide-Moat Stocks
- Itinerant, author of Itinerant's Musings
- Ranjit Thomas, CFA, author of Stock Scanner
- Eric Parnell, CFA, author of The Universal
- Bhavneesh Sharma, author of Vasuda Healthcare Analytics
- William Koldus, CFA, CAIA, author of The Contrarian
- Richard Berger, author of Income From Covered Option Writing
- Michael Markowski, author of Trophy Investing 100TM
We'll resume regular Marketplace Roundtable publication the weekend of January 7th. Follow the SA Marketplace account to stay on top of what's happening. We're looking forward to a great 2017.
Wishing you a happy, healthy, and profitable (on a risk-adjusted basis) 2017. Happy new year!
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.