Top Stock Picks 2017 – Michael Sprung on BNN’s Market Call – April 28th, 2017

Top Stock Picks 2017 Outlook
 

As we look back at the first 100 days of the Trump administration, we see a period filled with conflicting messages. The media has been prolific in their condemnation of Trump's policies but the capital markets have been more sanguine.  Sine the election in November, the US markets have enthusiastically embrace the promises of deregulation and lower taxes that were the cornerstones of the Trump campaign. The enthusiasm paused briefly when changes to health care met with resistance and investors realized that not all of the promises are likely to be easily forthcoming. The Canadian markets were not as robust. Weak energy prices and tepid economic growth were reflected in more range bound markets. European markets were a bit more robust as factories exhibited greater activity as was the case in much of Asia as exports from Taiwan, South Korea and China were up from a year ago.

Michael Sprung Top Picks BNN Market Call April 28 2017

Michael Sprung's Top Picks BNN Market Call: April 28, 2017

There is certainly reasons to be optimistic on the global economy as orders for capital equipment are on the rise and employment improves. It has been a long, hard climb out of the financial abyss of ten years ago as is often the case in financial crisis. The difficulty of the recovery has been reflected in large part in the rise of populist politics as evidenced by the Brexit vote and the election of Donald Trump. Europe faces a few key elections this year.

Politics and economic cycles are often out of sync. The politics of populism are not as accommodating to the concepts of free trade and globalization that have sown the seeds of the current recovery; yet those very politicians may point to the recovery and take credit where none is due, In fact they may sow the seeds of the next downturn.

We Canadians are very aware of these factors as we gear up for renegotiating the NAFTA agreement.

 

Top Stock Picks 2017


Canadian Imperial Bank of Commerce, CM-T, Owned by clients and personally, Last Purchase Sept 16, 2016 $101.00

CM is Canada's fifth largest bank by market capitalization. Over the better part of the past decade, management has concentrated on de-risking and shoring up the balance sheet largely by retrenching and focusing on core competencies. The bank is now the most profitable as measured by return on equity and has one of the strongest capital bases. The recent purchase of PrivateBancorp  establishes CM with a larger foothold in US. This is a well run, well managed bank and CM has paid a premium to make this purchase. Most recently, the share price has pulled back as concerns about the Canadian mortgage market have been in the spotlight. At current prices, the bank yields around 4.6%.

Suncor Energy, SU-T, Owned by clients, Last purchase March 2, 2016 $32.94

Suncor is Canada's largest integrated oil and gas company. Suncor has a strong production base with quality long-term assets, a strong balance sheet, and an integrated business model smoothing to some extent the cash flow from the various business segments. Management has been focused of increasing efficiencies and positioning the company for future growth. Over the remainder of the year, Fort Hills and Hebron will be coming online. Suncor has a strong balance sheet to support and expand operations. At current levels, the stock yields 3.1%.

Goldcorp, G-T, Owned by clients, Last Purchase March 30, 2017 $19.43

Goldcorp is one of North America's largest gold companies that  now beginning to reap the rewards of major capital spending over the past few years as Penasquito is in production. Joint ventures with Barrick and Teck Resources will assist in driving costs down over the next few years as management begins to prepare for future growth in Arizona and Chile.

You can view the complete Market Call interview here>>

What is Successful Investing? Learn more here>>

Download Our Free Special Report – How to Hunt For Value Stocks. Michael Sprung will share with you 5 stocks set for long-term gains here>>

We believe that investment management is about managing risk, not chasing speculative returns. Like to learn more? Please contact us here>> 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.  

Canadian Stock Picks — Michael Sprung on BNN Marketcall

Canadian Stock Picks

Canadian Imperial Bank of Commerce, CM-T, Owned personally and by clients, Last Purchase December 23, 2015, $92.49

CM is Canada’s fifth largest bank by market capitalization. Over the better part of the past decade, management has concentrated on de-risking and shoring up the balance sheet largely by retrenching and focusing on core competencies. The bank is now the most profitable as measured by return on equity and has one of the strongest capital bases. The recent purchase of PrivateBancorp establishes CM with a larger foothold in US. This is a well run, well managed bank and CM has paid a premium to make this purchase. As a result, the stock has languished somewhat against its competitors providing an opportunity for investors. At current prices, the bank yields around 4.9%.

canadian stock picks michael sprung bnn market call

Michael Sprung BNN Market Call Interview: Canadian stock picks and outlook

AGT Food and Ingredients Inc., AGT-T, Owned personally and by clients, Last Purchase December 18, 2014, $26.50

AGT is a leader in pulse processing for export and domestic markets. The company has had notable success in diversifying into food ingredients, an area that is facing increasing global demand. 2016 has been declared by the United Nations to be the International Year of the Pulse, highlighting the growing global demand for pulses. Recent stock supply levels may be cutting into current volumes that may result in lower seasonal results. The market appears to have priced this fact in given the recent pullback in the stock price. Export demand is growing and a larger fall harvest is anticipated.

Stuart Olsen Inc., SOX-T, Owned by clients, Last purchase April 19,2016, $6.77

Stuart Olson Inc, formerly The Churchill Corporation, is one of Canada’s largest construction firms providing general contracting and electrical building systems contracting in the institutional and commercial construction markets as well as electrical, mechanical and specialty services in the industrial construction markets. The stock has underperformed the market and its peers as investors have focused on its exposure to Western Canada. Going forward, there are plans by the governments of Alberta, Saskatchewan and BC, as well as the Federal government, to dramatically increase spending on infrastructure. At the end of the fourth quarter, SOX had a backlog of $1.96B(58% construction, 28% cost-plus, 5% design build and the rest in tenders). The Industrial Services Group while exposed to the oil sands, derives its revenue from maintenance, repair and operations in the energy, mining and hydro industries. Stuart Olsen has a good balance sheet. The dividend currently yields 7.4%.

OUTLOOK

North American markets have hit recent highs despite a growing list of negative geopolitical and business risks, particularly those stemming from the surprising vote in the UK to “Brexit”. At the same time, the global bond markets appear to be signalling an expected decline in economic activity. Governments out side of North America continue to attempt to stimulate economies through quantitative easing and proposed infrastructure spending. Over US$13 Trillion of sovereign debt is now at negative interest rates and the total continues to grow.

Politicians in North America and Europe are exploiting the public’s unrest through fear-mongering on the issues of globalization and free trade as was most evident in the Brexit vote and continues in the US presidential race. Whether or not politics can “trump” the economic and demographic cycles remain to be seen.

After a number of years of expansion fueled by debt, we could be entering a period of deleveraging that will stall global economic growth for a period and potentially caused markets to decline and volatility to increase. Investors should be prepared to take advantage in these circumstances to invest in well financed, well managed companies.

You can view the complete Market Call interview here>>

What is Successful Investing? Learn more here>>

Download Our Free Special Report – How to Hunt For Value Stocks. Michael Sprung will share with you 5 Canadian stock picks set for long-term gains here>>

We believe that successful investors focus on the quality of the assets they buy. Speculators focus on guessing the future prices. Like to learn more? Please contact us here>>

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.