Well the global stock markets are in full fledged correction mode and while many people are selling their shares and running screaming for the exit, I’ve been very busy buying into the correction. After all, I’ve been building cash for the past few months in anticipation of some kind of event that would take the steam out of the market and I guess I got my wish. As it stands now I have almost completely depleted my cash holdings.
Here are my recent stock purchases. You may notice that these companies are what Warren Buffett would call “forever stocks” because they are all strong companies with wide moats. You might also notice that 4 of them are among the top 10 most profitable Canadian companies.
Toronto Dominion Bank (TD)
Canada’s no. 2 most profitable company. TD is one of the best run banks in the world. What I like about this bank is that half of its revenue is from Canada and about half comes from its US operations. It has been a steady dividend grower historically and I don’t expect that to change. Through tough economic times and good, Canadian banks keep churning out profits and rewarding their shareholders with dividend increases.
Bank of Nova Scotia (BNS)
What can I say…What I said about TD applies to BNS too. Except that rather than being focused on the US market like TD is, BNS is focused more on international markets. With operations in Asia and Latin America, BNS is often touted as Canada’s most international bank. Right now that exposure is hurting them, so I’m loading up on their shares. When I think about long term trends, Latin America will probably do very well – they have an abundance of natural resources and a young labor force. As they begin to prosper economically, BNS will be right there churning out profits and raising its dividend.
Canadian National Railway (CNR)
This is North America’s best run railway and will continue to be very profitable well into the next century. It is busy moving everything from oil and wheat to shipping containers. These really are boom times in the railway industry. I’ve always wanted to own CNR so I took the plunge and bought some shares. It is not exactly a high dividend yielder though (1.3%). But it is a steady dividend grower and has rewarded shareholders with huge capital appreciation over the last 5 years.
Suncor Energy (SU)
Suncor is the largest Canadian integrated oil company. It operates an upstream business of oil extraction in the oil sands and also a downstream business that consists of refining the oil into a variety of petroleum products and gas service stations that operate under the Petro-Canada brand. It is a low cost producer. Their operating costs range between $35 and $40/barrel so even with oil at $80 they are still making money. The company has, since 2011, a new shareholder-friendly CEO that has been busy buying back shares and raising the dividend on the one hand, while cutting costs and pursuing better capital allocation policies on the other. At one point a few days ago, shares in Suncor traded down about 25% from the June high of over $47. The stock is cheap with a safe 3% yield so I bought a whole lot more of it!
Procter & Gamble (PG)
I wanted to increase my US exposure and I’ve been watching PG for a few months now. While it is not exactly trading at bargain prices, it is still a high quality US Blue Chip that will continue to do well for many decades to come. If you’re not familiar with PG, they make a variety of consumer staple products like Tide clothing detergents, Crest toothpaste, Pampers, shampoo like the Head and Shoulders brand, Bounty paper towel wipes etc.
That’s all for now. What about you? Have you been buying into this correction? What are you buying?