Paul Harris, partner and portfolio manager, Harris Douglas Asset Management

FOCUS: North American and global stocks 

MARKET OUTLOOK:

We think that central banks should maintain higher rates until inflation is in line with the target of two per cent and the market is too optimistic concerning the number of rate cuts.

We believe that rates are in the process of normalizing around the world and this is important for investors as they now have a choice for their investable assets.

We should see volatility during the year as we will have many elections around the world.

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TOP PICKS:

Stryker (SYK NYSE)

Stryker is one of the world’s leading medical technology companies. The company offers innovative products and services in orthopedics, medical and surgical, neurotechnology and spine. With the acquisition of Wright Medical, it will have products for hands and ankles which help improve patient and hospital outcomes. The company has 73 per cent of its business in the U.S., 21 per cent is international (developed markets) and six per cent in emerging markets. Great demographic play as the population ages, Stryker’s products become more useful and helpful, furthermore, there is somewhat of an annuity with med tech products as once surgeons start and learn they tend not to change. SYK is a well-diversified company and with its strong balance sheet should be able to manage through any macroeconomic pressures.  SYK is generating nearly $3.3 billion of free cash flow in 2022 of which around 25 per cent is being used for dividends. This still leaves the majority of SYK's annual free cash flow that could be used for M&A and pay down debt. It covers interest payments 11.4 times and has a high free cash flow conversion rate.

Essilor Luxottica (ESLOY OTC)

Essilor Luxottica is a global leader in design, manufacture and distribution of ophthalmic lenses, frames, and sunglasses. Essilor is a market leader across the entire value chain in eyewear. The global eyewear market offers attractive long-term resilient growth, especially when screen use has gone up exponentially. We see the Grand Vision acquisition as transformational and Essilor will be a winner in the digital transformation of eyewear. The stock has a dividend yield of 1.75 per cent, has a strong balance sheet and accelerating free cash flow growth.

Novo Nordisk (NVO NYSE)

A Danish multinational pharmaceutical company. Novo Nordisk is controlled by majority shareholder Novo Holdings A/S which holds approximately 28 per cent of its shares and a majority of its voting shares. The diabetes and obesity care segment includes diabetes, obesity, cardiovascular, and emerging therapy areas. The rare disease segment refers to rare blood disorders, rare endocrine disorders, and hormone replacement therapy. The company's major drugs are Ozempic and Wegovy which continue to drive revenue and earnings. We believe we are in the early stages of these blockbuster drugs and continued research that shows the drug helps reduce heart disease and stroke.

PAST PICKS: APRIL 5, 2023

Apple (AAPL NASD)

• Then: US$163.76
• Now: US$169.83
• Return: 4%
• Total Return: 4%

Alphabet (GOOG NASD)

• Then: US$104.95
• Now: US$132.96
• Return: 27%
• Total Return: 27%

Visa (V NYSE)

• Then: US$228.17
• Now: US$280.87
• Return: 23%
• Total Return: 24%

Total Return Average: 18%