BNN – Top Stock Picks and Market Outlook – Market Call Tonight, December 11, 2013

BNN – Top Stock Picks and Market Outlook : Market Call Tonight, December 11, 2013

The global economy exhibits encouraging trends as conditions in Europe have recently been more stable with signs of modest growth, the decline in the growth rate of the Chinese economy has been arrested and the North American economy continues to expand with growing momentum.  Stock markets, particularly in the US, have surged as investors have regained confidence in the sustainability of the recovery.  As we approach the New Year, we suspect that the markets may be vulnerable to a correction as concerns about the curtailment of monetary easing persist, or some geopolitical event, perhaps from the Middle East, disrupt investors’ confidence.  Beyond that, the Canadian market which has lagged the US this year, should improve as the demand for energy and materials expands with improving economic conditions.

Top Stock Picks

Encana Corporation (TSE:ECA) Market cap 14.37B, P/E 33.18, Div/yield 0.07/1.50, EPS 0.59, Shares outstanding 740.14M, Website: Owned by Clients, Last Purchase $18.97 on Oct 29, 2013.

Top Stock Encana Corporation Montney, Duvernay, San Juan, DJ Basin Tuscaloosa Marine Basin.

Top Stock Pick – Encana Corporation plans to expand liquids production in Montney, Duvernay, San Juan, DJ Basin and Tuscaloosa Marine Basin.

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 2012, Encana acquired certain exploration and evaluation lands and properties. On February 9, 2012, it sold two natural gas processing plants in the Cutbank Ridge area of British Columbia.

ECA has enviable positions in key emerging properties.  Going forward, the company has announced plans to expand liquids production in Montney, Duvernay, San Juan, DJ Basin and Tuscaloosa Marine Basin.  This expansion will be done with a focus on maintaining the integrity of the balance sheet through disciplined capital spending in line with cash flow.

HudBay Minerals Inc.(TSE:HBM) Market cap 1.33B, P/E – , Div/yield 0.01/0.26, EPS -0.22, Shares outstanding 172.08M, Website:  Owned by Clients and Personally, Last Purchase $8.70 on Oct 28, 2013.

HudBay Minerals Inc. produces copper concentrate (containing copper, gold and silver) and zinc metal and focuses on the discovery, production and marketing of base and precious metals. It owns mines, ore concentrators and zinc production facilities in northern Manitoba and Saskatchewan and South America. The South America properties include the Constancia project in Peru, Hudbay Chile, Hudbay Colombia and Hudbay Panama.

HudBay Minerals is one of Canada’s leading producers of zinc, copper and precious metals.  The company has a very strong balance sheet.  The company has been methodically addressing concerns regarding its ability to finance the construction of Constancia in Peru, most recently through a royalty streaming arrangement with Silver Wheaton (SLW) and an issue of unsecured notes.

George Weston Limited (TSE:WN) Market cap 9.84B, P/E 21.84, Div/yield 0.41/2.16, EPS 3.52, Shares 127.90M, Website:  Owned by Clients, Last Purchase $79.06 December 9, 2013.

George Weston Limited is a Canada-based company engaged food processing and distribution. The Company has two operating divisions: Loblaw and Weston Foods. The Loblaw division, which is operated by Loblaw Companies Limited and its subsidiaries, is a food retailer and a provider of drugstore, general merchandise and financial products and services. The Weston Foods division is a fresh and frozen baking company in Canada and operates a frozen baking manufacturing business in the United States and a North American biscuit manufacturing business

Weston has a strong cash balance and the company will benefit from the operational improvements undertaken by Loblaw over the last few years.  The current competitive environment, particularly in the Ontario region, has caused the shares to retreat to an attractive price level.

See Michael discuss these stock with Mark Bunting on BNN Market Call Tonight 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.

Market Outlook & Top Stock Picks

Market Outlook & Top Stock Picks

Investors are almost paralyzed by the uncertainty resulting from the political stalemate dealing with the fiscal imbalance in the US, a deepening recession in Europe, growing turmoil in the Middle East and fear of a slowing economy in China. Until year end, tax loss selling and profit taking will cause further drag on the market hopefully offset by the occasional release of some positive economic data. This volatility will provide opportunities to purchase exposure to good quality companies at reasonable valuations for those with the cash to seize those occasions.

Suncor (SU-T): Owned by clients, Last Purchase October 25, 2012 $32.40
Suncor is Canada’s largest integrated oil and gas company. Upstream activities include extensive oil sands operations and core conventional business in eastern Canada, the North Sea, Africa, the Middle East and South America. Downstream operations include four refineries as well as some 1600 retail locations. Suncor is undervalued given its growing cash flow and potential for significant growth over the next few years.

George Weston (WN-T): Owned by clients, Last Purchase November 20, 2012 $63.27
Weston is Canada’s largest food retailer through its majority ownership of Loblaws and a major provider of fresh and frozen bakeries in North America. Loblaws continues initiatives to enhance productivity and should start to reap benefits as the new SAP system rolls out next year. In order to counter input cost pressures, Weston Foods is exercising cost control measures. In our opinion, the current valuation indicates that investors are underestimating the underlying strength of Weston given its strong balance sheet .

Churchill Corporation (CUQ-T): Owned by clients, Last Purchase June 29, 2012 $12.25
Since the problems surfaced following the Seacliff acquisition, CUQ’s stock has been severely punished. As the legacy contracts in general contracting that created the problems are completed, margins will start to improve. Backlogs in industrial services are at all-time highs. Under new management, there will be a sharp focus on improving profitability.

Learn more about Michael Sprung

Market Outlook & Top Stock Picks

Market Outlook & Top Stock Picks

Michael Sprung‘s market outlook: The third quarter of 2012 has been characterized by rising stock markets despite slowing and/or deteriorating economies globally. Commodity prices have generally advanced underpinning some of the positive movement in the Canadian market. Be prepared for some negative volatility going forward. Concentrate on financially strong companies that can endure. Have reserves ready to buy shares in these companies during setbacks.

Sunlife (SLF-T): Owned personally and by clients; last purchase June 18 2012 $21.63 Under the direction of Dean Conner, CEO, Sunlife has been at work de-risking the US variable annuity business, putting resources towards MFS, selling off UK exposure and exiting many unprofitable business lines. A more benign interest rate and equity market environment will result in higher levels of profitability in the future. At current prices, the stock is attractive.

Encana (ECA-T): Owned by clients, Last Purchase September 22, 2011 $20.61
Encana is one of North America’s largest natural gas producers with an enviable 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. 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 3.6%.

George Weston (WN-T): Owned by clients, last purchase March 29 2012 $62.25
Expense reduction and productivity enhancements have offset challenges to top line growth in recent quarters. Going forward, WN has about $2 billion in cash with which to exploit opportunities and invest in product improvements. The bakery business is well managed and efficiently run. WN’s share price should also reflect upside from Loblaws as operational efficiency improves from recent capital expenditures.