Part of my investment philosophy is to let winners run rather than selling early to lock in gains. This approach has been beneficial with stocks like Nvidia (NASD: NVDA) and Shopify (TSE: SHOP). However, I reduced my holdings in each after they came to represent over 40% of Portfolio 1 and Portfolio 3, respectively, to manage increased volatility.
On the flip side, this strategy has sometimes resulted in missed opportunities for greater profits, as was the case with Illumin Holdings (TSE: ILLM). After surging from C$2.00 to C$32.00 per share in less than a year, it plummeted to C$1.64. Although I made a profit, I could have made more had I sold earlier. ☹
While I generally prefer to let winners run and even expand my investments in them, I recognize there are times when it is wise to sell part of a stake, especially in smaller, more volatile companies.
This past week, I increased my position in a company that has demonstrated strong growth and continues to have great potential. Before I dive into the details of this additional investment, let’s review what else happened in the markets this past week.
Items that may only interest or educate me ….
Canadian Economic news, US Economic news, What are the different types of stocks? ….
Canadian Economic news
This past week’s key economic data that the Bank of Canada (BoC) considers when deciding whether to raise or lower the interest rate.
Labour Force Survey (LFS)
Statistics Canada’s LFS for April highlighted significant job gains, with the economy adding 90,000 jobs—a monthly increase of 0.4% and an annual rise of 1.9%. This substantial increase sharply contrasts with the decline of 2,200 jobs in March and surpassed analysts’ expectations of 18,000 new jobs. It represents the largest employment increase since January 2023, with the majority of new positions being part-time. Year-over-year, full-time employment rose by 1.7%, while part-time employment increased by 2.9%.
The unemployment rate remained steady at 6.1% in April, the highest rate since January 2022. On an annual basis, unemployment is up by 1.0% from last April. Meanwhile, average hourly wages among employees increased by 4.7% annually in April, although this is a slight decrease from the 5.1% rise recorded in March.
This LFS report presents a mixed picture: the surge in job creation is positive, indicating a strong economy, but it also raises questions about whether the BoC will lower the benchmark interest rate at their upcoming June meeting, given the robust labour market. I hope we get the best of both worlds, where the economy remains strong and the BoC cuts the interest rate. 😊
Canadian market volatility
Over the past week, Canada’s Volatility Index, the Montreal Exchange Volatility Index (VIXC), measured by the TSX 60, bounced up and down before finally ending the week at 12.07, down from the previous week’s 12.64. This decrease in volatility is likely due to a combination of factors, including continued strong corporate earnings, easing tensions in the Middle East, and increased likelihood that the BoC will lower interest rates in June.
Often referred to as Canada’s ‘fear gauge,’ the VIXC provides insights into expected volatility within the Canadian stock markets. Typically, readings above 20 signify high volatility, while those below 20 indicate lower levels. At its current reading of 12.07, the VIXC suggests the market remains well below the threshold for high volatility, indicating a generally calmer sentiment among investors.
US Economic news
This past week’s key data points that the Federal Reserve (Fed) considers when deciding whether to raise or lower the interest rate.
American market volatility
The CBOE Volatility Index (VIX), often referred to as the market’s fear gauge, declined this past week, ending at 12.55, down from the previous week’s reading of 13.49, and marking its lowest level since January. This decrease was likely the result of easing tensions in the Middle East, robust corporate earnings, and a cooling labour market. Typically, the VIX ranges from 10 to 20, with readings above 20 indicating heightened market volatility. The current lower VIX suggests reduced investor anxiety in the near term, but future economic data and global events could cause fluctuations.
Consumer Sentiment Index (CSI)
The University of Michigan’s preliminary reading on the CSI dropped sharply to 67.4 in May, down from a final reading of 77.2 in April. Analysts had expected a reading of 76. This significant drop of over 12% marks its lowest point in six months and follows four months of relative stability with readings in the high 70s. However, on an annual basis, the CSI is still up 14.2%.
The lower-than-expected reading reflects consumers’ concerns about slowing economic growth, a cooling labour market, and persistently high inflation, which in turn keeps interest rates elevated.
The final reading for May will be released on May 24, 2024.
What are the different types of stocks?
There are two main types of stocks: common and preferred. They differ in terms of voting rights, dividend priority, and risk profile.
Common Stocks
Common stocks are the most prevalent type of shares, typically what people refer to when they discuss stocks. Holders of common stocks usually have voting rights, which allow them to participate in corporate decisions such as electing board members and approving corporate policies. However, the influence of an individual investor is minimal, given the enormous number of outstanding shares. For example, owning 1,000 shares of Apple (NASD: AAPL) is negligible compared to its billions of outstanding shares.
These stocks are associated with higher potential returns, particularly from young, high-growth companies, such as Shopify, which prefer to reinvest profits to fuel further growth rather than pay dividends. In contrast, well-established companies in slower-growing industries (like utilities or mature tech firms such as Microsoft (NASD: MSFT)) often offer steady dividends, attracting those seeking regular income.
The primary risk with common stocks is evident during a company’s bankruptcy; common shareholders are last in line for any remaining assets, positioning these shares as the riskiest in times of financial distress.
Preferred Stocks
Preferred stocks are less common and operate somewhat like bonds, providing a fixed dividend and thus a regular income stream, which is attractive to income-focused investors. For example, The Royal Bank of Canada’s Series BO preferred shares (TSE: RY.PR.S). These shares pay a fixed non-cumulative preferential cash dividends, payable quarterly. For more detailed information on this series of preferred shares, click here. Preferred shares typically do not confer voting rights, which might deter investors seeking a say in company governance.
Preferred shareholders enjoy a priority over common shareholders in the distribution of assets upon company liquidation, offering a greater degree of security in adverse conditions. However, they still rank below debt holders in the repayment hierarchy. Additionally, issuers of preferred stocks may retain the option to buy back these shares at predetermined prices, providing companies with financial flexibility but potentially capping the gains for investors.
Weekly Market Review
Monday: the momentum from last week carried over, lifting all four major North American indexes – the Toronto Stock Exchange Composite Index (TSX), the S&P 500 Index (S&P), the Dow Jones Industrial Average (DJIA), and the Nasdaq Composite Index (Nasdaq). Investors have renewed optimism after last weeks softer than expected US jobs data that the Fed will lower rates this year, possibly as early as September. Oil prices moved upward on news Saudi Arabia planned to raise the price for crude oil in June, and increased tension in the Middle East.
In Canada, US investor optimism proved contagious as the TSX closed the day at its highest point in three weeks. A day of broad-based gains in the Canadian sector with Technology and Basic Materials (miners and fertilizer manufacturers) leading the way. Healthcare was the only sector to lose ground.
In the US, investor expectations for a rate cut propelled all three indexes to their third straight day of gains. It was a good day for trading in the American sectors, led by Technology and Consumer Cyclicals, with Consumers Staples and Telecommunications Services bringing up the rear.
Tuesday: it was a mixed day for the four indexes, with the Nasdaq the only one to end in the red. The markets moved higher on hopes of a rate cut but reversed course after a Fed official said the Fed was likely to leave the rate unchanged for an extended period to allow inflation to continue falling.
In Canada, the TSX notched its fifth straight win as investors increasingly believe the BoC will lower the interest rate at their June meeting, and that commodity prices will continue to climb. In trading, Basic Materials and Energy ended the deepest in the green, while Healthcare and Consumer Staples ended the deepest in the red.
In the US, the S&P ran its daily winning streak to four, while the DJIA advanced for the fifth straight session. In trading, the Consumer Staples and Utilities sectors posted the biggest gains, while Consumer Cyclicals and Technology declined the most.
Wednesday: the indexes were mostly lower today, with the lone exception of the DJIA which managed to stay in positive territory all session. Taking the wind out of the markets’ sails were comments from a Fed official saying it would take longer, “than previously thought” to get inflation down to the 2% goal. Oil prices edged higher on news that US crude oil inventories were lower than expected as refiners cranked up production in preparation for more driving during the summer.
In Canada, the TSX’s winning streak came to an end as TSX heavyweight Shopify fell 19% after the company projected slower revenue growth over the next few years. As well, investors took some money off the table after the recent run up. In trading, Consumer Staples and Utilities had the biggest gains while Technology and Healthcare had the biggest losses.
In the US, the indexes had a bit of everything today. The DJIA notched a sixth straight day of gains, its longest winning streak of 2024, while the S&P was flat and the Nasdaq lower. In trading, Utilities and Financials were up the most and Basic Materials and Consumer Cyclicals were down the most.
Thursday: the markets rallied after a weekly US jobless report showed the number of unemployed increased to its highest point since last August, suggesting the US economy continues to slowdown. Oil prices edged higher as the world’s two biggest economies (USA and China) reported strong demand.
In Canada, the TSX closed at a record high on the strength of higher commodity prices. In trading, the best performing sectors were Basic Materials and Healthcare, while Technology, Consumer Staples and Consumer Cyclicals were the only sectors to fall.
In the US, the beat goes on for the DJIA as it rose for the seventh consecutive session. The higher unemployment numbers have investors hoping the Fed will lower interest rates. In trading, most of the sectors ended higher, led by Utilities and Basic Materials. Technology was the only American sector to end in the red.
Friday: the week closed on a mixed day for the indexes, with the DJIA and the S&P ending in the green and the TSX and Nasdaq in the red. Investors are await next week’s key US inflation report to get a sense when rates could fall. The price of oil dropped following comments from Fed officials indicated high interest rates could be around for a while, which could lead to lower demand.
In Canada, a higher jobs report that could delay an expected June rate cut by the BoC combined with lower oil prices to send the TSX lower. In trading on Bay Street, Consumer Staples and Industrials posted the biggest gains while Technology and Healthcare suffered the biggest losses.
In the USA, the DJIA extended its win streak to eight to close out its best week since mid December. Consumer sentiment dropped by 13% as consumers grow concerned inflation and interest rates are going in the wrong direction. In trading on Wall Street, Consumer Staples and Technology advanced the most, while Consumer Cyclicals and Energy declined the most.
Weekly Market and Portfolio Review
For the week, the TSX (SPTSX) rose 1.6%, the S&P 500 (SPX) added 1.9%, the DJIA (INDU) climbed 2.2% and the Nasdaq (CCMP) edged higher by 1.1%.
| Index | Weekly Streak |
| TSX: | 1 – week winning streak |
| S&P: | 3 – week winning streak |
| DJIA: | 4 – week winning streak |
| Nasdaq: | 3 – week winning streak |
As illustrated in the chart above, all major North American markets ended higher this past week despite a lack of major economic news to drive the markets. Investor optimism stemmed primarily from strong corporate earnings reports, coupled with hopes for a potential rate cut in the fall. However, comments made by several Fed officials throughout the week emphasized that the US benchmark interest rate would need to remain elevated “for a bit longer” due to persistent inflation around the 3% mark. The consensus of the Fed pointed towards maintaining the current rate of 5.5% to eventually cool the American economy to the 2% target, although one official expressed an expectation for rate cuts within the year.
In Canada, the TSX climbed by 1.6%, marking its largest weekly gain in nearly five months, propelled by robust corporate earnings and similar optimism that the Fed could reduce the US interest rates later this year. Additionally, Canadian analysts suggested that with declining inflation in Canada, the BoC could lower the Canadian interest rate as early as June. However, the recent unexpectedly strong job data could delay these cuts, causing the TSX to pullback a bit at the end of the week.
Investors now shift their focus to next week’s US Consumer Price Index inflation report, eagerly looking for signs of progress on inflation and further cues from the Fed regarding potential rate cuts. The outcome of this report will be crucial in determining whether the current market rally can persist or if a pullback is on the horizon. Investors hope that a favorable inflation report could bolster the case for rate cuts both in Canada and the US, further fueling market optimism.
| Portfolio | Weekly Streak |
| Portfolio 1: | 3 – week winning streak |
| Portfolio 2: | 1 – week winning streak |
| Portfolio 3: | 1 – week losing streak |
This week proved challenging for the three portfolios, particularly in contrast to the broader market, where all four indexes gained at least 1%, as illustrated in the chart below. Although Portfolios 1 and 2 managed to finish in the green, the sharp decline in Portfolio 3 significantly offset these gains.
Portfolio 1 eked out a modest gain, supported by advances in most of its holdings. However, significant losses in Docebo (TSE: DCBO) down 22%, Decisive Dividend (TSEV: DE) down 21%, Navitas Semiconductor (NASD: NVTS) down 14%, and Unity Software (NYSE: U) down 13% dampened overall performance.
Portfolio 2 saw the largest weekly increase, with 72% of the companies posting gains. Though most of those gains were modest, Guardant Health (NASD: GH) stood out with a 17% gain.
Portfolio 3 faced significant challenges. Despite most companies achieving minor gains, a 21% drop in Shopify following a revenue slowdown warning heavily impacted the portfolio. Shopify, previously the largest holding and now the second largest, significantly influences the portfolio’s performance when its share price moves substantially. Additional losses from Telus International (TSE: TIXT) down 20%, and a downturn in Unity Software further compounded the downturn.
It was not the best week overall, but dwelling on the negatives is not helpful. Instead, I am viewing Shopify’s sharp decline as a potential buying opportunity. 😊
Companies on the Radar
This past week, MasTec, Inc. (NYSE: MTZ), a mid-sized American engineering firm with a market capitalization between $2 billion and $10 billion, came onto my radar. Specializing in the construction of large and complex infrastructure projects, MasTec operates across several industries, including communications and energy solutions. While not necessarily a high-growth company, MasTec is well-positioned to benefit from the expanding build-out of communications systems, electric vehicle (EV) charging stations, renewable energy facilities, and other infrastructure projects. The company’s focus adds a layer of stability and diversification to any of portfolios, sparking my interest to look deeper into what MasTec has to offer.
MasTec joins the other four companies on my radar, listed below.
- Equitable Bank (TSE: EQB), a mid sized Canadian bank, considered Canada’s 7th bank, that provides financial services to consumers and businesses.
- Lumine Group (TSE: LMN), a young Canadian mid sized company that acquires communications and media software companies, and then strengthens and grows those companies.
- LVMH Moët Hennessy – Louis Vuitton, Société Européenne (OTCM: LVMUY), commonly known as LVMH, is a French multinational conglomerate specializing in luxury goods. It is the world’s largest luxury goods company.
- Evolution AB (OTCM: EVVTY), a Swedish company that provides live casino solutions for global gaming operators.
Please keep in mind that these are only companies that have piqued my interest. This is not a recommendation or financial advice. You should do your own research or contact a professional before making any investment decisions.
The Radar Check was last updated May 10, 2024.
NOTE: Morningstar and Thomson-Reuters analysis is unavailable for Evolution and LVMH from my usual sources because the company’s home stock exchange is in Europe. While it is possible to invest in both companies through the Over-the-Counter Market, I do not have access to analysis similar to the data available for companies traded on the major North American stock exchanges (Toronto Stock Exchange, New York Stock Exchange, and Nasdaq Stock market). The Analysts Rating and Price Target for these two companies are from Yahoo! Finance, under the Analysis tab once you have searched for the ticker.
Portfolio Update
Portfolio 1
Portfolio 1 for the week ended May 10, 2024: UP 
- Amazon.com’s (NASD: AMZN) Amazon Web Services (AWS) will invest US$ 8.9 billion in the Singapore regions to build out its cloud computing infrastructure.
In other Amazon news, Amazon.com opened its online shopping service in South Africa. In Germany, AWS entered the global telecom market. Telefonica Germany plans to move one million of their customers onto the AWS cloud late in May. - Apple announced they are building their own artificial intelligence (AI) chips for their data centres.
- General Motors (NYSE: GM) announced the end of the Chevy Malibu. Over nine generations of the model, GM had sold over 10 million of the cars. The Malibu assembly plant will focus on producing EVs such as the Chevrolet Bolt.
- Navitas Semiconductor (NASD: NVTS) announced that their founder and Chief Executive Officer Gene Sheridan has been named a finalist for Ernst & Young LLP’s Entrepreneur of the Year award.
- Alphabet (NASD: GOOGL) has asked a British tribunal to stop a lawsuit against its Google business unit. The lawsuit is for US$ 17 billion and states Google has abused its market dominance in the online ad market.
In other Google news, the company is expanding its partnership with CrowdStrike (NASD: CRWD) to use CrowdStrike’s Falcon cybersecurity platform and Google’s Cloud security operations to enhance their cybersecurity capabilities.
Activity
Bought: Hammond Power Solutions (TSE: HPS.A) – I first invested in this company nearly a year ago, and since that time, Hammond has performed well. Revenues, net income, earnings per share, and free cash flow have all increased. Typically, such improvements in a company’s performance are followed by an increase in its share price—and that is exactly what happened with Hammond. Its share price and annual dividend have more than doubled, making it highly rewarding for shareholders. 😊
Furthermore, Hammond has successfully grown its business. Despite an increase in production capacity, the backlog of orders still grew by 11% in the first quarter of 2024 compared to the same period last year. Hammond is well-positioned to benefit from the global shift from fossil fuels to electric power. The recent dip in its stock price presents a strategic opportunity to increase my investment. This move aligns with my long-term growth strategy and aims to leverage the current positive momentum in their stock performance.
Dividends
Dividends Received this week for the following companies:
Canadian $
No C$ dividends this past week.
US $
Ferrari N.V (NYSE: RACE)
Costco Wholesale Corp (NASD: COST)
Quarterly Reports
Crew Energy Inc.
First quarter 2024 financial results on May 7, 2024
Rivian Automotive, Inc.
First quarter 2024 financial results on May 7, 2024
Datadog, Inc.
First quarter 2024 financial results on May 7, 2024
Celsius Holdings, Inc.
First quarter 2024 financial results on May 7, 2024
Magnite, Inc.
First quarter 2024 financial results on May 8, 2024
The Trade Desk, Inc.
First quarter 2024 financial results on May 8, 2024
Innovative Industrial Properties, Inc.
First quarter 2024 financial results on May 8, 2024
Decisive Dividend Corporation
First quarter 2024 financial results on May 8, 2024
Navitas Semiconductor
First quarter 2024 financial results on May 9, 2024
Telus Corporation
First quarter 2024 financial results on May 9, 2024
GDI Integrated Facility Services Inc.
First quarter 2024 financial results on May 9, 2024
Docebo Inc.
First quarter 2024 financial results on May 9, 2024
Unity Software Inc.
First quarter 2024 financial results on May 9, 2024
indie Semiconductor, Inc.
First quarter 2024 financial results on May 9, 2024
Portfolio 2
Portfolio 2 for the week ended May 10, 2024: UP
- Disney (NYSE: DIS) and Comcast (NASD: CMCSA) plan to hire an investment bank to independently value the streaming platform Hulu. The two companies will engage a financial advisor to resolve the dispute over the remaining third of Hulu that Disney intends to purchase from Comcast.
- Guardant Health announced their technology has been reviewed by over 500 peer scientific journals.
Activity
No significant activity to report this week.
Dividends
Dividends Received this week for the following companies:
No dividends this past week.
Quarterly Reports
Chorus Aviation Inc.
First quarter 2024 financial results on May 6, 2024
Crew Energy Inc.
See report under Portfolio 1.
The Walt Disney Company
Second quarter 2024 financial results on May 7, 2024
Airbnb, Inc.
First quarter 2024 financial results on May 9, 2024
Telus Corporation
See report under Portfolio 1.
Guardant Health, Inc.
First quarter 2024 financial results on May 9, 2024
Mitek Systems, Inc.
First quarter 2024 financial results on May 10, 2024
Portfolio 3
Portfolio 3 for the week ended May 10, 2024: DOWN 
- TD Bank (TSE: TD) said they were well on their way in an overhaul of their global anti-money laundering program.
- Microsoft is in the process of training their own in-house AI language model that that will put the company at the same level as OpenAI (who they currently license for their Copilot service) and Google’s Gemini service.
In other Microsoft news, after announcing billions in investments in data centres and AI infrastructure in various parts of the world, Microsoft announced they planned to invest over US$ 3.3 billion in Wisconsin to build a new data centre to expand the company’s growing AI initiatives. - Brookfield Asset Management (TSE: BAM) announced they are taking a 51% stake in US private credit manager Castlelake for US$ 1.5 billion. Castlelake will retain its current management structure and will continue to operate independently.
Activity
No significant activity to report this week.
Dividends
Dividends Received this week for the following companies:
No dividends this past week.
Quarterly Reports
Real Matters Inc.
Second quarter 2024 financial results on May 7, 2024
goeasy Ltd.
First quarter 2024 financial results on May 7, 2024
Magnite, Inc.
See report under Portfolio 1.
Shopify Inc.
First quarter 2024 financial results on May 8, 2024
Brookfield Asset Management Ltd.
First quarter 2024 financial results on May 8, 2024
GDI Integrated Facility Services Inc.
See report under Portfolio 1.
Telus International Inc.
First quarter 2024 financial results on May 9, 2024
Unity Software Inc.
See report under Portfolio 1.
Brookfield Corporation
First quarter 2024 financial results on May 9, 2024