Stockwatch – Outlook
We had previously stated that compelling valuations were getting harder to find from which we concluded that market prices were running ahead of fundamentals. In September, commodities and stock markets reacted negatively to the perceived slowing of the emerging economies and the ongoing stagnation in Europe. The decline in energy and materials weighed on Canadian stocks and the Canadian dollar. The US economy continues to exhibit signs of growth and this will eventually have positive impact on the Canadian economy. As valuations correct, investors should be prepared to invest in quality securities.
Stockwatch – Top Picks
Stockwatch – Bank of Nova Scotia, Owned by clients, last purchase September 4, 2014: $71.75
The Bank of Nova Scotia (TSE:BNS, Mkt cap 83.27B, P/E 11.68, Div/yield 0.66/3.86, EPS 5.86, Shares 1.22B) is the most international of the Canadian banks with branches in the Caribbean, Central and South America. The Canadian banks have been impacted by recent market declines. BNS is now selling at levels that long-term investors should find attractive. The dividend yield is now 3.9%.
Stockwatch – Agrium, owned by clients, last purchase June 24, 2014: $99.64
Agrium Inc. (TSE:AGU, Mkt cap 13.65B, P/E 14.88, Div/yield 0.84/3.54, EPS 6.36, Shares 144.00M) Low crop prices and slowing economies have caused the short term outlook for fertilizer prices to diminish and hence the decline in the prices of fertilizer stocks. Agrium recently lowered their short-term guidance in both the retail and wholesale sectors. The price of the stock has overcompensated for these events thus making the stock attractive for long-term investors.
Stockwatch – Suncor, Owned by clients, last purchase March 4, 2014:$36.70
Suncor Energy Inc. (TSE:SU, Mkt cap 54.79B, P/E 14.53, Div/yield 0.28/2.99, EPS 2.58, Shares 1.47B) 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. The recent pressure on energy prices has caused the energy related stocks to pull back significantly. Suncor has the financial strength and diversified base of operations to do well and maintain its dividend that currently produces a 3% yield.
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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.