MARKET OUTLOOK:

October’s U.S. consumer price index (CPI) report helped to brighten the mood on Wall Street as the report came in better than expected and investors began to focus on a potential U.S.  Federal Reserve pivot to their interest rate policy into 2023. 

Several of the Fed’s board members and regional presidents have tried to moderate investors’ expectations about a pivot on interest rate policy in last week’s speeches pointing out that inflation could continue to be difficult to control. As a result, investors continue to be uncertain as to the direction the Fed’s interest rate policy will take in the future. 

We continue to see more leading indicators pointing to the fact that the economy is either very close to a recession or already in one. The weakening economic news may seem bleak, but looking under the surface some bright spots are beginning to emerge. After being one of the strongest asset classes all year, the U.S. dollar has had a significant retreat from the high. This could be signalling a shift in investors’ risk tolerance.

Many investors are feeling fatigued from the bear market and are starting to give up on investing in equities. While this is the case it may be a contrarian signal as several of the long-term technical indicators we monitor are showing a possible change in risk appetite by investors. Some of those indicators are starting to improve in a similar fashion to previous market bottoms. Looking at those longer-term indicators we are turning more optimistic the markets may be within a few months of a new uptrend.   

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TOP PICKS:

Salona Global Medical Device (SGMD CVE)

Salona Global Medical Device is a health care supplier focusing on the $30 billion recovery science medical device market. The company is led by an executive chairman with a history of a successful build and exit in the same sector. SGMD has had a 154 per cent year-over-year revenue growth while generating positive EDITDA. SGMD continues to grow both via acquisition and organically and trades at an attractive valuation to peers.  Last purchase was $0.62, funds own, owned personally or owned by my family.

Reliq Health Technologies (RHT CVE)

Reliq Health Technologies is a healthcare technology company providing software as a service in the community health sector. RHT generates recurring revenue via a subscription model and is growing organically as it adds health-care organizations and end patients. During the last year, it has increased revenue by 460 per cent to $8.5 million and is projecting to exit 2022 with a run rate revenue of $60 million. Last purchase was $0.71, funds own, none owned personally, and none owned by my family.

Green Thumb Industries (GTII CNSX)

Green Thumb Industries is a Chicago, based cannabis multi-state operator (MSO) with 17 manufacturing facilities, 77 retail locations in 15 U.S. states. In the last quarter, the company reported revenue growth of five per cent and EBITDA growth of 17 per cent. GTII recently announced an agreement with Alimentation Couche Tard in Florida. Last purchase was $17.99, funds own, none owned personally, and none owned by my family.