Market Outlook & Top Stock Picks

Market Outlook & Top Stock Picks

The recent advances in the global equity markets have been in reaction to improving economic fundamentals. In the US, employment has been on the rise and manufacturing, particularly in the auto sector, is recovering. In Europe, recessionary conditions are proving to be milder that originally feared and the crisis in Greece has abated for the time being. Although the world economies appear to be achieving a more solid footing, the recovery remains fragile and setbacks could occur in reaction to further European fiscal calamities and slowing demand from the emerging economies. Investors should be prepared to take advantage of these potential negative reversions.

CIBC (CM-T): Owned personally and by clients, Last Purchase December 2011 $71.10
CIBC has undergone a transformation over the last ten years. The balance sheet is much improved and the bank has the largest proportionate capital base of its peers and achieves the highest return on equity. The valuation of CIBC’s shares has yet to reflect the improvements of its reduced risk exposure.

Encana (ECA-T): Owned by clients, Last Purchase September 2011 $20.61
Encana is one of North America’s largest natural gas producers with an enviable growing stable of assets extending from British Columbia to Texas and Louisiana participating in many of the key sectors including the Barnett Shale, Montney, Horn River, Piceance and Haynesville. A joint venture has been agreed with Mitsubishi Corporation to develop resources in Cutback Ridge. Weak natural gas prices have negatively impacted the share price. Rising demand over the next few years should be reflected in future valuation. The dividend yield is close to 3.9%.

CAE (CAE-T): Owned personally and by clients, Last Purchase March 22, 2012 $9.86
CAE is a world leader in flight simulation systems for commercial and military customers. In addition, the Company designs products for applications in the health care and mining industries. New aircraft that are coming into service will cause demand for CAE’s products to increase. The shares are attractively priced close to $10.00.
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3 thoughts on “Market Outlook & Top Stock Picks

  1. I agree that Fed stimulus, mid-east concerns could drive oil prices higher. Do you think the USD will gain strength in that type of situation versus CAD, others?

  2. With Loblaw spinning off its real estate holding as a REIT, do you have any concern about corporations getting their money out before a major downturn cripples the value?

  3. I agree that the Nexen and Progress deals are good for shareholders. I’m not convinced they are good for Canada. Can we expect other countries to reciprocate for Canadian business?