Street consensus and Buy. Hold and Sell:

Torstar (TS.B) seems to be a value trap at the moment. They are sitting on a lot of cash – companies sitting on cash are usually bad investments. They are tying to go digital, the publisher is leaving, the shares are trading at multi-year lows and out of the 5 analysts that cover the company – all 5 have a “Hold” rating on the stock.  Again - we all know that a “hold” rating means they just don’t know.

One BNN contributor recently said – “Torstar is stupid cheap,”

So there are a lot of negatives – we have a shrinking business with no analyst support and a fundament guy thinks the stock is “cheap”. Cheap to me means cheap because nobody wants to own the shares. I bought some Torstar stock last week because of all the fundamental negatives – and the one technical positive – a bounce of the recent lows on a big (for Torstsr) volume increase. Thanks to Stockcharts.com for the CandleGlance plot of Torstar.

More on the value of street consensus:

According to The Wall Street Journal – April 21, 2016 the Analyst Ratings on the TSX listed Alimentation Couche-Tard Inc (ATD.A) was currently 11 buys, 2 holds and no sells. Three months ago it was 12 buys, 2 holds and no sells. We all know that a “hold” means they just don’t know.

A few posts ago I observed that on BNN’s popular Market Call shows there was a growing tendency for the callers to ask the host for the “street consensus” in addition to the guest opinion on a particular company. The problem is the street consensus is usually a “buy”, a “hold” and rarely a “sell”.

One Market Call guest correctly described Couche-Tard to be “One of the darlings of the TSX via growth by acquisition.”

The fundamentals I see are based on common sense – first the stock was over loved and over-owned and secondly when you grow by acquisition – each one has to be bigger in order to propel the growth story..(sort of like the Valeant story)

Technically the “B” shares are trading below both the 50 and 200 day simple moving averages, the stock is underperforming the TSX Comp and the S&P500 and the point & figure has peaked and the down O’s sit on key support at $55

Our weekly bar chart of Couche-Tard spanning about 100 weeks displays the relative perform vs. the TSX Comp and Couche-Tard’s 40-week moving average. Clearly the street consensus and the technical picture do not agree.

More on phoney Share Buy-Backs:

Today a quote from Aaron Tilley, Forbes Staff - on the Intel workforce cut:

“Reeling from a four-year decline in the PC market, Intel said Tuesday that it would cut 11% of its workforce — or about 12,000 employees. The news came as Intel reported financial results for the first quarter that were roughly in line with Wall Street estimates, but the company forecast weaker-than-expected sales for the current quarter. The cuts will save Intel, the world’s largest chipmaker, an estimated $1.4 billion annually once the are completed and allow the Santa Clara, Calif.-based company to refocus its resources on new areas of growth. The company will also take $1.2 billion restructuring charge.”

A few months ago on a post I was negative on share buybacks stating - the move makes the company's profit per share look better, and many think buybacks have played a key role pushing stocks higher in the seven-year bull market. - but buybacks can also sap companies of cash that they could be using to grow for the future, no matter if the price of those shares rises or falls.

According to Intel, “As of April 2, 2016, $8.6 billion remained available for repurchase under the existing repurchase authorization limit and we have repurchased 4.8 billion shares at a cost of $106 billion since the program began in 1990.”.So far in Q1 this year (2016) Intel has shelled out 800 $million for share buybacks – while at the same time letting go bout 12,000 employees.

Clearly the interests of the employees and the shareholders are not aligned – the employees wish to have a long term job, and the shareholders only wish for the stock price to go up and the sooner the better. Also – when the share count shrinks – the company market cap gets smaller and companies do not shrink themselves to greatness.