BNN Market Call Tonight Interview: Market Outlook and Top Picks

Market Call Outlook:

After a number of years of positive performance, North American markets are looking a stretched. In Canada, the retreat in energy prices continues to reverberate through the economy. In the US, valuations are appearing somewhat on the high side and investors are wary of any impending interest rate hikes. Given the strength of the US dollar, we do not believe rate hikes are likely in the immediate future. Despite the slower rate of growth in China, the market there continues to reach new highs despite falling export and import levels.  Commodities have been constrained by the anticipated lower demand levels from China. The European economy appears to be stabilizing to some degree with the obvious problems in Greece, Portugal and Spain still weighing on investors concerns. In this environment, we would not be surprised to see a pullback in the markets that would afford investors the opportunity to find better values.

Market Call Top picks Michael Sprung Alaris Royalty ARC Resources CAE Inc

Market Call Top picks from Michael Sprung: Alaris Royalty, ARC Resources, CAE Inc

Market Call Top Picks:

Alaris Royalty Corp. (TSE:AD, Mkt cap 993.91M, P/E 17.42, Div/yield 0.12/4.86, EPS 1.77, Shares 32.18M) Owned by Clients: Last Purchase May 28, 2015, $31.62
Alaris Royalty is a unique investment firm that invests  in a diversified range of private companies with solid long term histories and stable management teams. The nature of the investment allows Alaris to participate in future growth while  the entrepreneurs maintain control provided certain agreed upon benchmarks are met.  Management has had a successful track record in identifying good investment opportunities. Last week, management announced the largest investment to date in a construction firm in  Texas. As investments and cash flow have grown, dividends have increased. We anticipate that investors will continue to participate in Alaris’ growth.

ARC Resources Ltd (TSE:ARX, Mkt cap 7.42B, P/E 19.82, Div/yield 0.10/5.50, EPS 1.10, Shares 340.03M) Owned by Clients: Last Purchase May 28, 2015, $22.80

ARC Resources is a Canada-based oil and gas company. The Company’s business activities include the exploration, development and production of crude oil, natural gas and natural gas liquids in five core areas across western Canada. The Company is also engaged in the Sunrise gas plant construction. Its operations are focused in five core areas across western Canada. ARC Resources has a strong balance sheet and the dividend is well covered even at current commodity prices. The shares offer an attractive yield of 5.5% at current prices.

CAE, Inc. (TSE:CAE, Mkt cap 3.98B, P/E 19.72, Div/yield 0.07/1.88, EPS 0.76, Shares 267.18M) Owned Personally and by Clients, Last Purchase August 21, 2014, $13.45

CAE Inc is a Canada-based company that provides modelling, simulation and training for civil aviation and defence. The Company has a good balance of customers between military and civil applications. CAE has invested over the last few years in expanding training facilities in anticipation of a pending higher turnover in pilot retirements over the coming years resulting in greater demand for training services. As such, utilization rates should increase as capital expenditures are reduced. CAE is well financed and managed.

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The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

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