CIBC assesses risks faced by Canadian investors in 2017

The Canadian economy faces "major downside risks" related to the incoming U.S. administration's trade policies and Republican-backed corporate tax reforms, according to a new report from CIBC Capital Markets.

These risks will impede the Bank of Canada's ability to tighten monetary policy, the report predicts.

CIBC risks Canadian investors 2017

CIBC assesses risks faced by Canadian investors in 2017

"We would need a huge and unlikely upside surprise to push the Bank of Canada into a rate hike this year," said Avery Shenfeld, CIBC chief economist. "Particularly since the Trump administration's trade-policy-by-Twitter and a Republican-backed corporate tax reform plan biased against import content both represent a major downside risk if Canada gets caught in the crossfire."

In the more negative scenario, Shenfeld expects the Canadian dollar to come under pressure. "The shock to U.S.-bound exports would engender a much steeper slide in the Canadian dollar, well beyond 1.39 Canadian dollars per U.S. dollar we expect to see on monetary policy differentials," he explained.

CIBC forecasts that Canada's real GDP will grow by 1.8% in 2017 and 2.0% in 2018, with growth in the energy sector offsetting a reduced contribution from housing and consumption.

The U.S. economy is predicted to show 2.3% growth in 2017 and 2.1% in 2018, although uncertainty is "extremely high" surrounding Trump policies, the bank said.

"For corporate Canada, the instinct would be to judge a becalmed outlook as reason to eschew active hedging for now. But the potential for a Trump in the night bump suggests looking for opportunities to hedge against a pullback in commodities, a weaker Canadian dollar, and a rise in long term rates," Shenfeld concluded.

Toronto based Canadian Imperial Bank of Commerce (TSE:CM, Mkt cap 43.73B, P/E 10.31, Div/yield 1.24/4.49, EPS 10.71, Shares 397.22M) is a global financial institution. CIBC provides a range of financial products and services to approximately 11 million individual, small business, commercial, corporate and institutional clients in Canada and around the world. The Company operates through three segments: Retail and Business Banking, Wealth Management and Capital Markets. The Company's Retail and Business Banking segment provides personal and business clients across Canada with financial advice, products and services in its banking centers or through remote channels, such as mobile advisors, telephone, online or mobile banking. The Company's Wealth Management segment provides advice and investment solutions. The Company's Capital Markets segment provides integrated credit and global markets products, investment banking advisory services and research to corporate, government and institutional clients around the world. More from Reuters »

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 clients are more concerned about losing money than making speculative gains. 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 consumers prioritise debt repayment in 2017

Paying down debt is the top financial priority for Canadian consumers in 2017, according to new research from CIBC.

CIBC Canadian consumers prioritise debt repayment 2017

CIBC – Canadian consumers prioritise debt repayment in 2017

The bank found that reducing or eliminating debt was at the highest level since 2010. It was the number one financial concern for 28% of the 1,507 Canadian adults questioned, up from 26% a year ago.

Other financial priorities for the coming year included: keeping up with bills or getting by (16%); growing existing savings or investments (11%); saving for a vacation or travel (8%); and saving for retirement (6%).

Of those prioritizing debt repayment, the vast majority (76%) were most concerned with paying their credit card and line of credit debts.

The survey also revealed that 70% of Canadians did not take on any new debt in the past 12 months, while 28% did. Among those incurring new debt, almost a third (32%) cited managing day-to-day expenses beyond their monthly income as the primary reason.

"With debt loads continuing to climb, it's encouraging that repaying debt remains a top priority for Canadians," commented Scott Wambolt, senior vice president of Retail and Business Banking at CIBC. "However, with some Canadians saying they are taking on debt just to cover day-to-day expenses and too few actually seeking advice on how to build a repayment plan, it's clear there is a gap when it comes to taking action on debt reduction."

CIBC found that just over half of those surveyed (52%) plan to reduce their spending on non-essential items to meet their 2017 financial goals. Yet only a quarter (26%) will actually set a household budget, and fewer still (12%) will meet with a financial advisor to get professional advice on how to reduce their debt and meet their financial goals.
 

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.

 

Stockwatch – Canadian Imperial Bank of Commerce Reports Healthy Profit In Q3

Stockwatch – Strong performance at the bank’s capital markets division was the main driver in boosting the bottom line.

Stockwatch – Canadian Imperial Bank of Commerce (TSE:CM, Mkt cap 41.89B, P/E 13.38, Div/yield 1.00/3.79, EPS 7.89, Shares 396.97M) has announced an encouraging 5% rise in profit in the third quarter, in comparison with the same period last year.

Stockwatch - Canadian Imperial Bank of Commerce 5% rise third quarter profit

Stockwatch – Canadian Imperial Bank of Commerce has announced an encouraging 5% rise in profit in the third quarter.

CIBC, Canada’s fifth-largest lender, saw its net income increase to $921 million from $878 million a year ago, which equates to $2.26 per share. The figures were better than forecasted by analysts, the report added.

Strong performance at the bank’s capital markets division was the main driver in boosting the bottom line, with profit at the wholesale banking unit rising 32% to $282 million, attributed to strong underwriting activity.

 

Gerald McCaughey, CIBC’s chief executive officer, praised the bank’s “solid” results, adding that they show the strength of its retail and wholesale banking franchises and durable wealth management platform.

The retail and business banking arm did in fact show a 4% drop in net income to $589 million. However, the Globe and Mail reported that the figure alone doesn’t tell the whole story, as the bank recently sold half of its Aeroplan credit card portfolio. Factoring this in, the division’s net income actually increased by 4% in the period.

Profit at the bank’s wealth management arm rose to $121 million, a 19% leap compared to the same three-month period a year ago. The unit accounted for 13% of total profit for the quarter, as CIBC continues to expand this area of its business.

McCaughey said the Toronto-based bank will continue to strive to be the leading bank for its clients. “Our clear focus on client service coupled with our strategic growth initiatives underpins our ability to deliver consistent and sustainable earnings,” he added.

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

Is Your Stock Broker Acting in Your Best Interest? Read more here>>

Exchange Traded Funds Expose Investors to Unexpected Risks. Read more here>>

Investment Management – Risk vs. Return. Read more here>>

We believe successful investors must challenge the market consensus by maintaining an independent point of view. 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.

StockWatch – Five Stock Picks from Michael Sprung of Sprung Investment Management

StockWatch – “We are still finding relatively good value in the energy sector,” says  Michael Sprung, President of Sprung Investment Management Inc., in an interview with SmallCapPower.com. Mr. Sprung provides some insight into corporate Merger & Acquisition activity and mentions five stocks that he likes currently, including two small-cap names.

Mark Thorburn: Founded in 2005, Sprung Investment Management help clients moderate swings in market volatility through a “value investing” approach. Aimed at preserving wealth and providing a real rate of return after fees and inflation, they are known for employing philosophies that run contrary to current investment trends.

Sprung is different from other investment management firms and that they make a deliberate attempt to minimize trading and transaction costs. They make decisions based on due diligence and staying in the course rather than reacting to market volatility.

In June 2014, we asked Michael Sprung about his current view of the economy.

StockWatch – See the interview at SmallCapPower here>>

Michael Sprung: Well, I think right now we’re at a very interesting crossroads. Gwyn Morgan was writing the other day in the Globe and Mail, He noted that Der Spiegel had an article about a week or so ago and the headline was, “Troubled Times: Developing Economies Hit a BRICS Wall.” He’s referring of course to the BRICS, Brazil, Russia, India and China. The fact that those economies to some extent seem to have stalled. Particularly Brazil which we have seen their problems lately in getting the Olympics together, Russia of course facing all the sanctions, India primarily lots of potential bad loans there and corruption and China of course the slowdown in the economy and the overbuilding of infrastructure and so on of the last number of years some of it not in such great quality and so on.

Where as what we’re seeing in the U.S., the economy is actually an expanding economy now. On an absolutely basis, the U.S. is likely to contribute more to global GDP this year than China. So, where the BRICs had a large surplus contribution before, now the sort of developed economies including Britain and Germany and the U.S. and so on, are actually going to have more of a contribution.

So I think this is quite interesting because it affects Canada in a lot of ways. It affects Canada in terms of demand for resources. We’re seeing more manufacturing in the U.S. Now, the U.S. is still our largest export partner, but we are depending more and more upon the emerging economies. You wouldn’t know that to look at the stock markets today. To the end of last week, the total return on the TSX was still over 9%. Now, we’ve pulled back a little bit since then. Whereas the U.S. they have been closer to four and the emerging economies you are likely to see two.

In terms of the stock market reaction, I think we’re in a very interesting time here. Our view is that particularly in Canada perhaps the stock markets are a little bit of ahead of the fundamentals. So we would not be surprised to see a pause. Now, if we did see a pause due to the fact that the U.S. is picking up to the extent that it is, we think that could be an opportunity for investors to step in.

Mark Thorburn: What is your view on the new strategy at Rogers Communications Inc. (TSE:RCI.B)?

Michael Sprung: I think Rogers faces a number of issues and problems to get over. One of them is the backbone of their infrastructure in terms of technological ability; it appears to have stalled out relative to some of the newer things that are available such as fiber. They do compete in the wireless world, but they’ve been having trouble. They’ve defined their new strategy in terms of trying to get back both business and retail confidence to try to reestablished themselves as technological leaders and to try to just regain some of the share that they’ve lost over the years.

I think that they’re going to have a tough time achieving that. Now, they’re adapting a structure that is not unlikely see in other telcos, but they’re still going to have an awfully large executive suite. They’re not only going to have sort of consumer enterprise and media but with that, they’re going to have all of the other sort of corporate human resources, legal, accounting, and so on. So it ends up with about 12 or more people still in that executive suite. So I think it’s going to be a very difficult for them to achieve the turnaround that they’re looking for particularly in a short period of time.

Mark Thorburn: There have been a number of Canadian banks that have reported strong earnings this quarter, are there any other banks that you think will surprise on the upside?

Michael Sprung: Well, we’re certainly hoping that tomorrow this Canadian Imperial Bank of Commerce (TSE:CM) will surprise on the upside. Now, so far we’ve seen Bank of Nova Scotia, Royal, TD and National Report. Certainly, with the exception of the National, I think the results were far ahead of expectations and more of the real surprises came in.

A lot of people have been talking about the head winds and credit and the debts of consumers and yet we’re seeing provisions for credit losses at least the ratios remained relatively low. So credit has been surprising on the upside.

Net interest margins in this environment to a great extent have been expanding. We’re seeing great results out of international banking and capital markets have surprised more on the upside than the downside particularly with respect to trading and so on.

Now, we own exposure to Royal Bank and Nova Scotia and CIBC. I think tomorrow when CIBC reports, people are going to be looking very closely not only at the credit situation but also the success of their new credit card programs since they lost Aerogold to the TD. Aerogold did contribute somewhat to TD’s results, but I think this new Aventura Visa card that CIBC has coming out is going to surprise people on the upside as well. So overall, we’re expecting to probably have fairly healthy results out of the CIBC tomorrow and we look forward to seeing that when it happens.

Mark Thorburn: Do you anticipate that merger and acquisition activity is going to pick up in 2014?

Michael Sprung: Yes, we do. We anticipate that M&A activities going to pick up for a number of reasons. We’re in a slower growth world than we were in previous cycles. In order for companies to grow, I think they’re going to depend more and more on M&A activity to achieve that incremental growth. I think we’re already seeing it in a number of areas, energy being one. But we’re also seeing it amongst pharmaceuticals and other companies today. In a world where GDP growth is going to be much slower around 2.5% to 3% in order to achieve that, and I think beyond organic growth we are going to see a much more dependence on mergers and acquisitions. So that should make the investment bankers quite happy.

StockWatch Michael Sprung SmallCapPower.com

StockWatch – “We are still finding relatively good value in the energy sector,” says Michael Sprung

Mark Thorburn: What sectors do you currently like?

Michael Sprung: Well, in terms of places where we continue to find value, I’d have to say that despite the fact that energy is been amongst the best performing sectors of the TSX so far this year, we’re still finding relatively good value. I mean energy as a whole has been up about 14% year-to-date. And despite the fact that we’ve seen natural gas prices increased by both 12% which I think has surprised people on the upside, however, West Texas Intermediate for instance is only up about 3.5% year-to-date. We’ve seen a lot of the stocks beginning to run. I think largely as a result of the production increases that we’re beginning to see particularly in the U.S. and that is also contributing to the efficiencies in the economy to some extent particularly on the manufacturing side.

So in terms of exposure, we still today like in Canada for instance. Now, and Canada has really, really surprised people with some of these things that they have done in terms of the recent of issue of PrairieSky by Encana Corporation (TSE:ECA) at prices above what anybody thought that they might be able to sell that at. That’s been a great surprise spinning out of the royalty business in Clearwater. The purchase of the large chunk in Eagle Ford I think has also been particularly a positive surprise to the market. We expect going forward that that will continue to be reflected in positive results in the share price at least over the next number of years.

We also think that the dependence on natural gas make it down on the next couple of years to both 75% of production from the 85% where it currently is.

We also like Cenovus Energy Inc (TSE:CVE) because that’s a company where you have fairly predictable production increases over the next number of years. The capital goes again to it. Again, they manage to maintain the cost of that oil sands development to a great extent. It’s a very efficient company, a very efficient management and they do have a both upstream and some downstream assets as well.

Finally, of course, Suncor Energy Inc. (TSE:SU) which has been a long-term holding of ours which is more of a fully integrated play but again good balance sheet, great management, and again expanding production over the next number of years. So we like all three of those and we’ll continue to hold them.

Mark Thorburn: Do you have any favorite small cap companies you’d like to mention?

Michael Sprung: Yes, occasionally we do go down into the smaller cap and in fact what people might even consider almost micro cap. One exposure we have is Temple Hotels Inc. (TSE:TPH). Now, eight of the twenty-one hotels that Temple owns are in the Fort McMurray area. Given the limited expansion available there, they have quite a lock on the market. They also have been very aggressive acquirers of hotels in other areas primarily in the west.

We see this is a company that, today you can buy for roughly eight times available funds from operations that used to be a unit trust, so we still tend to look at it that way. Yet, it carries a very healthy yield around 8.5% which reflects a payout ratio of about 75%, so I think that’s quite sustainable. So there is a company that we’ve done very well on that I think we will continue to hold unless it appreciates quite dramatically from here.

Another example would be Alaris Royalty Corp. (TSE:AD) which is a more recent purchase of ours. This is almost like a private equity firm but rather than take equity interest directly in companies, they issue preferred shares which escalate in terms of their payouts provided certain benchmarks are made and if they don’t, then it can convert into real equity.

So they have had an expanding dividend over the last five years and we suspect that that will continue to expand. They currently have 12 investment partners, the largest of which represents both 17% of their funds coming in. They plan to reduce that to about 10% into not too distant future. So we’re seeing a diversification amongst health care, industrial, retail other areas, they tend only to invest into private companies which have good long-term tenure track records at least. So I think it’s been so a very, very smart management team that is designed to this company which is very, very lean at head office.

So again, it’s currently selling under $29 I think. Anything under that level it certainly could represent a good longer term purchase.

Mark Thorburn: Thank you for taking the time for the interview today, Michael.

Michael Sprung: Thank you.

    CIBC Gains on 4th Quarter Earnings

    CIBC fourth quarter earnings per share came in at C$2.22 per share, increasing 8.8% year over year.

    CIBC (Canadian Imperial Bank of Commerce, TSE:CM, market cap 36.05B, P/E 10.97, Div/yield 0.96/4.26, EPS 8.21, Shares outstanding 400.00M,) saw its bottom line contract 1.9% in the quarter to 31 October as a result of a one-time charge related to the reorganization of its Caribbean banking operations and costs associated with the introduction of its new credit card.

    CIBC fourth quarter earnings

    CIBC fourth quarter earnings per share came in at C$2.22 per share, increasing 8.8% year over year.

    The country’s fifth-largest lender ended the quarter with net profit of C$836 million, equal to C$2.05 a share, after recording a net result of C$852 million, or C$2.02 a share, in the same period the previous year. The bank reported adjusted earnings of C$2.22 per share against C$2.04 last year, exceeding the forecast of C$2.15 made by 14 analysts in a Bloomberg poll.

    Toronto-based CIBC wrapped up the financial year with C$3.4 billion in net income, an increase of 3% over last year’s C$3.3 billion.

    These results reflected top-line growth, lower provision for credit losses and increasing loans and deposits. However, higher non-interest expenses and a decline in non-interest income were the headwinds for the quarter.

    Total provision for credit losses were C$271 million ($261.2 million), declining 17.4% from the prior-year quarter. Loan loss ratio stood at 0.41% compared with 0.53% in the prior-year quarter. The company expects to maintain a loan loss ratio below 60 bps in the upcoming quarters.

    Canadian Imperial Bank of Commerce declared a quarterly cash dividend of C$0.96 per share for the quarter ending Jan 31, 2014. The dividend will be paid on Jan 28, 2014 to shareholders of record as of Dec 27, 2013.

    CIBC continues to sell at a discount to its peers, despite its industry leading profitability and strong capital base.

    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.

    BNN Top Stock Picks and Market Outlook

    BNN Top Stock Picks and Market Outlook : Market Call : September 04, 2013

    We anticipate a challenging environment in the final months of 2013.  Middle East tensions are escalating while concerns regarding the apparent slower growth in the emerging economies work together to confuse investor sentiment.  Closer to home, fears of  the effect tapering of the US Federal Reserve’s easing will have on the capital markets and speculation as to the direction the Reserve may take under new leadership, adds to investor discomfort.  Disciplined investors will be taking advantage of market setbacks in this period as they position portfolios for the years ahead.

    With interest rates rising, investors are re-evaluation their risk. We are pleased to offer qualified* investors our free portfolio review. It will help you to understand if your portfolio  matches your personal risk tolerance. Ask us how>>

    Canadian Imperial Bank of Commerce (TSE:CM)

    Market cap 32.84B, P/E 10.00, Div/yield 0.96/4.68, EPS 8.21, Shares outstanding 399.99M, Last Purchase: $78.90, Date: March 27, 2013, Owned Personally and by Clients. Company website:  https://www.cibc.com/ca

    Canadian Imperial Bank of Commerce

    The Canadian Imperial Bank of Commerce posted positive results across all its major business lines.

    The Canadian Imperial Bank of Commerce is the fifth largest Canadian bank by deposits. The bank’s two strategic business units, CIBC World Markets and CIBC Retail Markets, also have international operations in the United States, the Caribbean, Asia and the United Kingdom. The company ranks at number 172 on the Forbes Global 2000 listing. CIBC was named the strongest bank in Canada and North America, and the 3rd strongest bank in the world, by Bloomberg Markets magazine, in May 2012.

    The banks have just finished reporting their third quarter results for the current fiscal year.  For the most part, results exceeded expectations.  The Canadian Imperial Bank of Commerce in particular posted positive results across all its major business lines.  The company earned C$890 million ($848.75 million), or C$2.16 a share, in the fiscal third quarter ending July 31. That compared with a profit of C$841 million, or C$2.00 a share, in Q3 2012. While some uncertainty remains regarding the future of their Aeroplan business, the stock continues to sell at a discount despite its industry leading profitability and strong capital base.

    Suncor Energy Inc. (TSE:SU)

    Market cap 54.17B, P/E 19.97, Div/yield 0.20/2.22, EPS 1.81, Shares outstanding 1.50B, Last Purchase $31.02, Date March 19, 2013, Owned by clients. Company website:  http://www.suncor.com

    Suncor is Canada’s largest integrated oil and gas company. The Company is focused on developing petroleum resources in Canada’s Athabasca oil sands. The Company also explores, acquires, develops, produces and markets crude oil and natural gas in Canada and internationally, and the Company transports and refines crude oil, and market petroleum and petrochemical products primarily in Canada. The Company operates under three segments: oil sands, exploration and production, and refining and marketing. It also markets third-party petroleum products and conducts energy-trading activities focused principally on the marketing and trading of crude oil, natural gas and by-products.

    In mid-August Warren Buffett, the CEO of Berkshire Hathaway Inc. revealed in a U.S. regulatory filing that he has accumulated 17.8-million shares in Suncor Energy Inc. His investment is worth $640-million at the current share price.

    Suncor is a core holding in our clients’ portfolios. It’s a significant validation to see other investors, including Mr. Buffett, the world’s bet know value investor, finally beginning to appreciate the compelling attributes of Suncor. These include 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.

    Agrium Inc. (TSE:AGU)

    Market cap 13.13B, P/E 9.24, Div/yield 0.52/2.32, EPS 9.62, Shares outstanding 147.66M, Last Purchase $96.55, Date: May 5, 2013, Owned by clients. Company website:   http://www.agrium.com

    Agrium Inc Vanscoy Mine

    Agrium Inc’s Vanscoy Mine – Agrium is well priced at current levels to provide a well-balanced vehicle to get exposure to the positive long-term attractive fundamentals in this industry.

    Agrium is a global producer and marketer of nutrients for agricultural and industrial markets. The Company operates through its three business units: retail, wholesale and advanced technologies (AAT). AAT uses three production methods: coating methods, in which fertilizers are encapsulated to provide a desired release profile; reacted slow release production, where urea is combined with other nitrogen elements to produce a slow release profile; and the packaging and blending of fertilizers.

    All of the stocks in this segment have been depressed with weakening prices and uncertain near-term demand.  Agrium is well priced at current levels to provide a well-balanced vehicle to get exposure to the positive long-term attractive fundamentals in this industry.  The company has a multi-product line in all three major nutrients as well as a retail segment that exhibits lower earning volatility often offsetting weaker periods in the wholesale segment.

    We are pleased to offer qualified* investors our free portfolio review. It will help you to understand if your portfolio matches your personal risk tolerance. Ask us how>>

    *Canadian residents with a minimum $500,000 portfolio.

    See Michael discuss these stocks with Michael Hainsworth on BNN Market Call here>>

    BNN Market Call – Market Outlook and Top Stock Picks July 22

    BNN Market Call – Market Outlook and Top Stock Picks July 22

    Market Outlook

    We are in reactionary times.  Investors are hypersensitive to pronouncements from the Federal Reserve and the release of economic data.  As a result of these often conflicting signals, market volatility will continue to be exacerbated as investors strive to discern the direction of the recovery.  During this period, investors should be prepared to invest in financially strong firms that will thrive as the recovery gains momentum over the next year.

    Top Stock Picks

    Canadian Imperial Bank of Commerce, CM-T, Mkt cap 30.98B, P/E 9.62, Div/yield 0.96/4.96, EPS 8.05, Shares outstanding 399.95M Last Purchase: $78.90, Date: March 27, 2013, Website: www.cibc.com Owned Personally and by Clients.

    The Canadian Imperial Bank of Commerce is the fifth largest Canadian bank by deposits. The bank’s two strategic business units, CIBC World Markets and CIBC Retail Markets, also have international operations in the United States, the Caribbean, Asia and the United Kingdom. The company ranks at number 172 on the Forbes Global 2000 listing. CIBC was named the strongest bank in Canada and North America, and the 3rd strongest bank in the world, by Bloomberg Markets magazine, in May 2012.

    Despite its industry high profitability and strong capital base, the stock has been lagging its peers of late.  While much of the market’s focus has been on growth in the US, CM’s attributes have been overlooked or misunderstood.  The stock represents good value at current levels with the potential to increase dividends in the future.

    Churchill Corporation, CUQ-T, Mkt cap 222.18M, P/E  – , Div/yield 0.12/5.32, EPS -2.70, Shares outstanding 24.60M, Last Purchase $7.94, Date: February 25, 2013, Website: www.churchillcorporation.com Owned by Clients.

    The Churchill Corporation, through its subsidiaries, provides building construction, commercial and industrial electrical contracting, earthmoving, and industrial insulation services to various public and private sector clients primarily in western Canada. It operates in three segments: General Contracting, Commercial Systems, and Industrial Services.

    Churchill is recovering from the severe impact of a number of major cost overruns in projects following the Seacliff acquisition in 2010.  As those projects wind down, margins will start to improve.  David LeMay, CEO, is very operationally focused.  The balance sheet is strong enough to carry the dividend throughout this period.

    Encana Corp CEO Doug Suttles

    Doug Suttles, Encana Corp’s new CEO will be focused on efficient allocation of capital.

    Encana Corp., ECA-T, Mkt cap 13.18B, P/E  – , Div/yield 0.20/4.56, EPS -4.56, Shares outstanding 735.46M  Last Purchase: $20.02, Date: December 21, 2012, Website: www.encana.com Owned by Clients.

    Encana Corporation is the third largest natural gas producer in North America. ECA’s operations include the transportation and marketing of natural gas, oil and natural gas liquids (NGLs). Encana’s Canadian Division includes the exploration for, development of, and production of natural gas, oil and NGLs and other related activities within Canada. The company’s USA Division carries out the same activities within the United States. During 2011, the Company sold its North Texas natural gas producing assets. During 2011, the Company acquired a 30% interest in the Kitimat liquefied natural gas (LNG) export terminal in British Columbia.

    While investors have been shunning natural gas stocks, Encana has been particularly hard hit as a number of large players have exited the exposure.  ECA is the 3rd largest natural gas producer in North America.  ECA has enviable positions in key emerging plays such as Montney, Horn River and Duvernay in Canada and Tuscaloosa, Eaglebine, San Juan, and Utica in the US.  Doug Suttles, ECA’s new CEO will be focused on efficient allocation of capital to  higher return projects than was previously the case.

    See Michael discuss these stocks with Michael Hainsworth on BNN Market Call here>>