Ryan Irvine on Capital Ideas TV

2018 is turning out to be a down year overall for North American equities. While the S&P 500 and NASDAQ just moved into negative territory year-to-date, the S&P/TSX Composite index is down 7% on the year and the S&P/TSX Small Cap Index is down 15% year-to-date. Given that we are headed into tax loss selling season, the losses may extend near-term, particular for the more volatile growth stock segment.

But, contrary to popular opinion, investors make their money in down markets, not up markets. It is the research we conduct today and the stocks we buy when others are selling the produce the best long-term gains when the market inevitably upticks once again.

That is why we just conducted a full review of each and every balance sheet and latest MD&A (management discussion and analysis documents) on every stock in Canada for KeyStone’s Cash Rich, Profitable Canadian Growth Stock Special Report.

Each year KeyStone analysts manually review over 3,500 Canadian stocks, narrow the field to 65+ profitable, cash rich growth stocks and make 3-5 individual BUY recommendations. The report is over 150 pages packed with summary reports on all 65 cash rich, profitable small-caps, full statistical analysis and individual BUY/SELL/HOLD recommendations on select stocks.

Companies with strong balance sheets including zero or manageable debt, solid cash positions, good working capital, and good cash generation can withstand downturns and prosper in market upturns. These Cash Rich stocks often positioned to outperform long-term. This outperformance can come from good to premium multiples (creating share price gains) or in the case of approximately 30 companies over the last 7 years from our Cash Rich Reports, premium takeover bids. Both lead to superior returns for investors. Again, the theme with these companies has been strong balance sheets and strong cash flow. The type of pristine balance sheet that can withstand and even profit from a downturn (via strategic expansion through purchase of distressed assets). We believe companies that hold this profile will continue to attract more attention from individual investors and as potential acquisition targets in 2019 and beyond.