Bruce Campbell, chairman and portfolio manager at Campbell, Lee & Ross

Focus: Canadian large caps

MARKET OUTLOOK

Markets late in the year took a nasty downturn. December was the fourth worst month since 1900 in New York. Equities are trying to adjust to slower growth forecasts for the global economy in 2019. Markets hate uncertainty, and issues around China, trade, tariffs, economic slowing and government shutdowns add to the worry. 

As long as there isn’t a recession soon (and we believe that is not quite likely yet), then we have likely over-adjusted. Price-to-earnings (P/E) are now below the long-term averages and since almost every asset class and every sector declined, there are good values to be had. Holding above average cash and having defensive holdings are the way to go for a while. New purchases can be averaged into the market over the next few months, there is no rush.

TOP PICKS

H&R REIT (HR_u.TO)

A large diversified REIT with retail and office exposure in Canada. Yield is currently 6.7 per cent and a nice place to hide in uncertain markets. It also trades at below its net asset value.

NUTRIEN (NTR.TO)

A world leader in the potash and nitrogen business, geographically diversified and is also over one-third in retail which allows a cost pass-through so margins won’t be squeezed. It is a growth business that is not tied directly to the business cycle.

ROYAL DUTCH SHELL (RDSb.N)

A world integrated energy company with an ever- improving balance sheet. Yield is now 6.7 per cent and you get paid to wait for any oil price recovery.

PAST PICKS: NOV. 2, 2017

MANULIFE (MFC.TO)

• Then: $26.54     
• Now: $19.42      
• Return: -27%     
• Total return: -24%

SNC-LAVALIN (SNC.TO)

• Then: $58.54     
• Now: $46.20      
• Return: -21%     
• Total return: -19%

ALIMENTATION COUCHE-TARD (ATDb.TO)

• Then: $62.32     
• Now: $66.61      
• Return: 7%         
• Total return: 8%

Total return average: -12%

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