Robert Gill, senior vice president and portfolio manager at 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 in the world and the biggest disruptions right now seem to be geopolitical. If we take a look around the world right now, there is plenty of risk and geopolitical disruption. In the Middle East, conflict seems to be escalating, rather than abating. Russia’s invasion of Ukraine is now in its third year, and it is a U.S. election year with a lot riding on the vote. All of this means there are a lot of external factors in the political economy that can influence the market right now.

If we want to invest successfully in this environment, we must buy high-quality companies with impressive profit margins and recurring revenue and invest in companies that have clean balance sheets and well-diversified portfolios.

If you are looking in the right places, there is plenty of value right now in Canada!

TOP PICKS:

Canadian Tire (CTC.A TSX)

The company is a retailer of tools, automotive, seasonal items, appliances and clothing. It is a competitor to Home Depot; Home Hardware; dollar stores and Walmart. Shares are down from all-time highs of $215 to $134 now on the back of recessionary concerns and a shift out of higher-yielding equities and into fixed income. If shares simply rebound to $215, that is a 60 per cent return without the dividend. The valuation is attractive and the yield is impressive.

BCE (BCE TSX)

A contrarian pick, BCE is a household name providing cable, internet, wireless and wireline phone communication. It also owns Bell Media and sports teams. Shares are trading off as investors shift money out of higher-yielding equities and into fixed-income assets for their greater perceived safety. The company is also facing increased competition and regulatory pressures. Meanwhile, shares trade at a multiple cheaper than the market, and offer an almost nine per cent dividend yield.

Alimentation Couche-Tard (ATD TSX)

This company is a global leader in the gas station and convenience sector. The company is geographically well-diversified with over 17,000 stores in 24 countries. Management continues to push growth forward through innovation, and through making acquisitions. Shares are attractive here at the current multiple and they pay a small yield as well.

PAST PICKS: May 3, 2023

Bank of Nova Scotia (BNS TSX)

• Then: $66.15
• Now: $62.62
• Return: -5 per cent
• Total Return: 1 per cent

CN Rail (CNR TSX)

• Then: $160.75
• Now: $170.74
• Return: 6 per cent
• Total Return: 8 per cent

TD Bank (TD TSX)

• Then: $81.47
• Now: $79.94
• Return: -2 per cent
• Total Return: 3 per cent

Total Return Average: 4 per cent