Robert Gill's Top Picks: November 1, 2023
Robert Gill, senior vice president and portfolio manager, Goodreid Investment Counsel
FOCUS: Canadian large caps
MARKET OUTLOOK:
Markets are very volatile right now and this is not surprising with so much going on. The biggest disruptions right now seem to be geopolitical and include Russia’s invasion of Ukraine and the Israel-Hamas war. Perhaps the biggest recent disruption in North America has been the dysfunction of the U.S. government, which took 21 days to elect a House Speaker. During this time, no legislation was passed in the House of Representatives.
What does this global uncertainty mean for Canada? Fortunately, none of this disruption is in Canada so it remains a great place to be invested right now for three reasons. Firstly our country is stable, both economically and politically. Secondly, inflation is slowly coming down, as higher interest rates take effect. Lastly, the S&P/TSX Composite Index is good value at 13.1x versus 19x and pays a yield of 3.4 per cent versus 1.5 per cent.
Where are you finding ideas in Canada? We see opportunities in interest-sensitive stocks, which have been hit hard. This includes banks, utilities and telecommunications. These sectors are interest-rate sensitive and in a rising rate environment and investors switched out of those areas and into fixed income.
If you want to be defensive, the energy sector has many opportunities. It has large dividend yields, buybacks and share prices supported by higher for longer oil prices.
In summary, it is very difficult to predict the future. If we want to invest successfully in this environment, we must have well-diversified portfolios and buy high-quality companies with strong balance sheets. There is plenty of value right now in Canada.
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TOP PICKS:
Canadian Tire (CTC. A TSX)
TC Energy (TRP TSX)
TD Bank (TD TSX)
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| Canadian Tire (CTC. A TSX) | N | Y | Y |
| TC Energy (TRP TSX) | N | Y | Y |
| TD Bank (TD TSX) | N | Y | Y |
Past Picks: November 30, 2022
Richelieu Hardware (RCH TSX)
- Then: $39.01
- Now: $41.74
- Return: 7%
- Total Return: 9%
BCE (BCE TSX)
- Then: $64.06
- Now: $52.14
- Return: -19%
- Total Return: -13%
Bank of Nova Scotia (BNS TSX)
- Then: $70.18
- Now: $56.29
- Return: -20%
- Total Return: -14%
Total Return Average: -6%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| RCH TSX | N | Y | Y |
| BCE TSX | N | Y | Y |
| BNS TSX | N | Y | Y |
