Christine Poole, chief executive officer and managing director, GlobeInvest Capital Management

FOCUS: North American large cap stocks 

MARKET OUTLOOK:

Financial markets are being swayed by data points and commentaries that may provide insight into the future direction of interest rates. Global monetary tightening is well underway with many central banks moving closer to their respective terminal policy rates.

While inflation looks to have peaked and is less acute, it remains well above the U.S. Federal Reserve’s stated policy range. Amidst a reasonably healthy employment situation, a Fed “pivot” does not appear requisite over the foreseeable future. Acknowledgement by central banks of the lags with which monetary policy affects economic activity is encouraging, suggesting the pace of interest rate increases may slow.

Consumer spending has been resilient with household income being supplemented by savings accumulated during the pandemic. However, many of the factors underpinning spending are not sustainable on a long-run basis. Savings are being drawn down and the saving rate has dropped sharply to a near historical low. On the other hand, credit card debt has risen markedly back to pre-pandemic levels. For now, while on the rise, delinquency rates remain low by historical standards. Should a softer labour market materialize, a retrenchment in consumer spending will inevitably follow.

Equity markets will go through periods of volatility which are beyond our control. However, investors can control how they react. Stock markets rise and fall, but notably, history shows that over the long-term, they go up more than they go down.

Staying invested maximizes wealth creation over the long run through owning a diversified investment portfolio tailored to meet your risk tolerance level, return objectives and liquidity needs.

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TOP PICKS:

Canadian Apartment Properties REIT (CAR.UN TSX)

Recent purchase price $41.50 range in November 2022

The company owns and manages multi-unit residential rental properties, including apartments, townhomes and manufactured housing communities, principally located in and near urban centers across Canada. The fundamentals in the Canadian apartment rental market remain positive, supported by the strong influx of immigration over the next few years. CAR.UN offers an income yield of 3.4 per cent.

Raytheon Technologies (RTX NYSE)

Recent purchase price of $93.50 range in November 2022

Raytheon Technologies is a leading aerospace and defence company engaged in providing advanced systems and services for commercial, military and government customers globally. Its product portfolio includes avionics, interiors, aircraft engines, sensor and communication systems as well as missile defence systems. The commercial businesses will benefit from the ongoing recovery in global air travel. The stock provides a dividend yield of 2.3 per cent.

WSP Global (WSP TSX)

Recent purchase price $159 range in November 2022

WSP Global provides engineering and design services to clients in the earth and environment, transportation and infrastructure, property and buildings, resources, power and energy, and industry. Through strategic acquisitions, WSP has expanded its global presence with Canada representing 17 per cent of revenues. Europe, the Middle East, India and Africa represent 32 per cent. The Americas represent 34 per cent and Asia Pacific 17 per cent. WSP is committed to its proven growth strategy of being a consolidator within a fragmented industry, continuous margin improvement and growing organically while maintaining a strong balance sheet.  WSP offers a dividend yield of 1.1 per cent.