This past week wrapped up a good October for all the portfolios and the 4 leading North American markets. This week saw a number of companies present Quarterly Reports, indicating how they performed during the July through September period, as well as provide insight on how their plans going forward. Without further ado, lets see what happened in the markets and the impact on the portfolios…
Market News
It was a mixed bag for the Toronto Stock Exchange (TSX) this past week. The week started off strong but on Wednesday the TSX posted it first lower close since Oct. 4, snapping a 14-day winning streak, rebounded the next day and finished off the week on a down note, for .8% loss for the week. However, for October the TSX rose 4.8%. Higher oil prices boosted energy stocks while financial stocks acted as a drag on the TSX.
South of the border, all three American Indexes had a positive week, the fourth straight positive week for each of them. Mid week, after the S&P 500 and Dow reached fresh peaks earlier in the week, on anticipation of earnings reports from mega-cap stocks Tesla, Apple and Amazon, the Nasdaq Composite reached a record high. However, after disappointing earnings from Amazon (predicting lower holiday sales due to labour shortages) and Apple (the impact of supply chain disruptions), both stocks declined. A number of companies set new highs the past week, including Tesla and Microsoft, with Microsoft surpassing Apple as the most valuable US company.
For the month of October, the technology heavy Nasdaq Composite led the way with 6.40% gain for the month of October, followed by the S&P 500 (5.70%), the TSX (4.40%) and the Dow Jones Industrial Average (4.35%).
For the Year to Date, the S&P 500 continues to lead the way, up 22.61%.
Portfolio News
Another week of gains for all three portfolios. As shown on the chart below, the technology heavy Nasdaq index had the best weekly performance, followed by Portfolios 2 & 3. Both hold Microsoft with Portfolio 2 getting a boost from MongoDB and Portfolio 3 getting a boost from Cloudflare. The TSX Index is more heavily weighted with Financial sector companies (banks) than the US indexes, and the Canadian banks did not have a strong week.
* Note: a cash withdrawal was made from Portfolio 1. The Oct. 25 opening balance was lowered by the corresponding amount to reflect the portfolio’s organic weekly performance.
Companies on the Radar
Rumour has it the Rivian IPO will be around November 25. The latest company to come onto my radar is Digital Ocean (NASD:DOCN), a cloud computing platform providing on demand computing services. Their financial metrics look good (but why would they make them look bad?) and based on the glassdoor reviews it looks to have good leadership and a good corporate culture. Everything looks good other than they appear to compete directly with the big 3 in cloud computing: Amazon, Microsoft and Google. I need to take a closer look to see how they are competing against the big 3 and what makes them a better alternative.
As with previous weeks, I’m considering adding shares to the following companies, in no particular order:
Portfolio Update
Portfolio 1
Portfolio 1 for the week ended October 29, 2021: UP 
This past week was not as busy on the buying front with one addition to the portfolio and more shares to an existing company. Most of my time was taken up reading up on seven Quarterly Reports. Otherwise, a number of companies set record highs this week, including well known companies like Tesla (electric cars), Nvidia (semiconductors), Home Depot (home improvement retailer), and less well-known companies such as Cloudflare (cybersecurity), Celsius Holdings (energy drinks), IIPR (medicinal marijuana real estate), and DataDog (network and systems monitoring). I always like to see companies hit new highs, even better when they constantly keep hitting new highs. 😊
Activity
Bought Crew Energy (TSX:CR) As per last week’s ‘Companies on the Radar’, I’m hoping to capitalize on the growing global demand for oil and natural gas, especially as we enter the colder winter season.
Bought Innovative Industrial Properties (NYSE:IIPR) Founded in December, 2016, IIPR was the first publicly traded company on the New York Stock Exchange to provide real estate capital to the medical-use cannabis industry. The company focuses on purchasing specialized industrial real estate assets for the regulated medical-use cannabis industry. It has an experienced management team; a strong balance sheet; consistent growth of net income, share price and dividends; and is part of an industry expected to grow to over $45.9 billion by 2025.
IIPR has done very well since it was first purchased and is one of the top performers across all of the portfolios. Purchasing a few more shares of IIPR was a no brainer for me, I just wish I’d bought those shares before it started its latest run up in early October.
Dividends
Dividends Received this week for the following companies:
Companies followed by DRIP (Dividend Re-Investment Plan) indicate additional shares were purchased with the dividend. Any cash leftover was added to the cash balance.
Canadian $
Shaw Communications (TSX:SJR.B)
US $
No US$ dividends this week.
Quarterly Reports
Selected highlights from their fourth quarter 2021 review presentation on October 26, 2021
Fiscal Fourth Quarter Results:
- GAAP net income of $3.6B or $1.65 per share and non-GAAP net income of $3.5B or $1.62 per share
- Net revenues of $6.6B, an increase of 29%.
Fiscal Full-Year Results:
- GAAP net income of $12.3B or $5.63 per share and non-GAAP net income of $12.9B or $5.91 per share
- Net revenues of $24.1B, an increase of 10%
Other Highlights:
- Indexed to 2019, fiscal fourth quarter payments volume, cross-border volume and processed transactions all increased from fiscal third quarter levels
- Returned $3.7B and $11.5B of capital to shareholders for fiscal fourth quarter and full-year, respectively, in the form of share repurchases and dividends
- The board of directors increased Visa’s quarterly cash dividend 17% to $0.375 per share
Selected highlights from their third quarter 2021 review presentation on October 27, 2021
- Gross Service Volume in the third quarter of 2021 was $904.0 million, with continued strong year-over-year growth of 38%
- increased active clients by 25% year-over-year
- Total revenue grew 32% year-over-year to $128.1 million in the third quarter of 2021.
- GAAP gross profit was $93.2 million for the third quarter of 2021, or 73% of revenue, compared with 73% of revenue in the year prior.
- GAAP net loss was $(9.3) million in the third quarter of 2021 compared to GAAP net loss of $(2.7) million in the third quarter of 2020.
Selected highlights from their fourth quarter 2021 review presentation on October 27, 2021
- Quarterly earnings per diluted share of $1.24
- Posted a September quarter revenue record of $83.4 billion, up 29 percent year over year
- Declared a cash dividend of $0.22 per share of the Company’s common stock
Selected highlights from their third quarter 2021 review presentation on October 27, 2021
- Achieved EBIT-Adjusted of $2.9B as we continue to develop solutions to mitigate the impacts of the semiconductor shortage
- Expect to be approaching the high end of the $11.5-13.5B EBIT-Adjusted guidance – delivering results significantly higher than the $10-11B original EBIT-Adjusted guidance shared in February
- GM Financial continues to deliver strong results
- Results highlight the strength of GM’s full-size pickup and full-size SUV franchises, which GM plans to leverage as they roll out their EV portfolio
Selected highlights from their third quarter 2021 review presentation on October 27, 2021
- Third quarter revenue grows 81% year-over-year to $522 million, updating 2021 revenue outlook to $2,015 million to $2,025 million.
- Total third quarter visits top 3.9 million – 37% higher than Q3 2020.
- Significant new agreements with CVS Health and Centene to provide Teladoc Health’s Primary360 to deliver greater care access and health engagement.
- Teladoc Health ranked 1st in consumer satisfaction by J.D. Power 2021 U.S. Telehealth Satisfaction Study
Shaw Communications (TSX:SJR.B)
Selected highlights from their fourth quarter 2021 review presentation on October 29, 2021
- Consolidated revenue increased 2.1% year-over-year to $1.38 billion.
- Net income increased 44% to $252 million
- Fiscal 2021 consolidated results include adjusted EBITDA1 growth of 6% and free cash flow of $961 million
- Fiscal 2022 priorities include supporting the closure of the transaction with Rogers and planning for the benefits that the combined entity will provide to Canadians
Portfolio 2
Portfolio 2 for the week ended October 29, 2021: UP
Another solid week for this portfolio, led by Microsoft and MongoDB, both achieving record highs.
Activity
No significant activity to report this week.
Dividends
Dividends Received this week for the following companies:
Companies followed by DRIP (Dividend Re-Investment Plan) indicate additional shares were purchased with the dividend. Any cash leftover was added to the cash balance.
Canadian $
Brookfield Select Opportunities Income Fund (TSX:BSO.UN) DRIP
US $
No US$ dividends this week.
Quarterly Reports
Selected highlights from their first quarter 2022 review presentation on October 26, 2021
- Revenue was $45.3 billion and increased 22%
- Operating income was $20.2 billion and increased 27%
- Net income was $20.5 billion GAAP and $17.2 billion non-GAAP, and increased 48% and 24%, respectively
- Diluted earnings per share was $2.71 GAAP and $2.27 non-GAAP, and increased 49% and 25%, respectively
- GAAP results include a $3.3 billion net income tax benefit explained in the Non-GAAP Definition section below
Selected highlights from their third quarter 2021 review presentation on October 29, 2021
- Q3 ADJUSTED EARNINGS PER SHARE C$0.64
- Q3 EARNINGS PER SHARE C$0.63
- 2022-2026 CAPITAL PLAN OF $20 BILLION ANNOUNCED, REPRESENTING 6% RATE BASE GROWTH
- EXECUTION OF 2021 $3.8 BILLION CAPITAL PLAN ON TRACK WITH $2.6 BILLION INVESTED THROUGH SEPTEMBER
Portfolio 3
Portfolio 3 for the week ended October 29, 2021: UP
After Shopify’s strong third quarter earnings report, the share price rose by up to $135 before closing the day around $118. Not only was it great to see this much of a run in one day, but the move was twice as much as the original purchase price of the Shopify shares. It’s always great when a stock runs up in one day more than the price paid. 😊 It was also great to see Microsoft and Cloudflare reach new highs.
Activity
No activity to report
Dividends
Dividends Received this week for the following companies:
Companies followed by DRIP (Dividend Re-Investment Plan) indicate additional shares were purchased with the dividend. Any cash leftover was added to the cash balance.
No dividends this week
Quarterly Reports
Selected highlights from their first quarter 2022 review presentation on October 26, 2021
- Revenue was $45.3 billion and increased 22%
- Operating income was $20.2 billion and increased 27%
- Net income was $20.5 billion GAAP and $17.2 billion non-GAAP, and increased 48% and 24%, respectively
- Diluted earnings per share was $2.71 GAAP and $2.27 non-GAAP, and increased 49% and 25%, respectively
- GAAP results include a $3.3 billion net income tax benefit explained in the Non-GAAP Definition section below
Selected highlights from their third quarter 2021 review presentation on October 28, 2021
- Total revenue in the third quarter was $1,123.7 million, up 46% Year over Year
- Quarterly merchant solutions revenue was $787.5 million, up 51%
- Gross Merchandise Value for the third quarter was $41.8 billion, an increase of $10.8 billion or 35%
- Monthly recurring revenue as of September 30, 2021 was $98.8 million
- Continue to expect to grow revenue rapidly in 2021, but at a lower rate than in 2020.
- Third quarter earnings per share view $1.09, revenue view $1.14 billion