Andy Nasr, vice president and investment strategist at Sentry Investments

Focus: REITs, global equities and macro strategy
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MARKET OUTLOOK
We continue to believe that equities will outperform fixed income, with a preference for Canadian and U.S. issuers. With very few exceptions, we anticipate that central banks will maintain relatively accommodative monetary policies that may be supplemented by fiscal stimulus. Excluding the U.S., growth in many global economies remains dependent upon currency valuations that sustain trade competitiveness and an improvement in domestic demand supported by low interest rates, credit growth and fiscal spending. Accordingly, it’s difficult to envisage a significant, sustainable and reflationary acceleration in global growth amidst a material increase in borrowing costs. Fixed income exposure should continue to provide investors with reasonable risk-adjusted returns, notwithstanding modestly higher interest rates and inflation expectations. Negative interest rate policies (NIRP) in Europe and Japan have been demonstrably disappointing, as lowering and anchoring borrowing costs has modestly improved spending, inflation and economic growth. Diminishing political risk and an improvement in domestic demand and operational leverage could justify an increased allocation to international equities as the year progresses. In the interim, we believe there’s superior earnings visibility underlying Canadian and U.S. equities.

TOP PICKS

BIRD CONSTRUCTION (BDT.TO)
Bird operates across Canada as a general contractor focusing on the industrial, mining, commercial and institutional sectors. We expect the company’s backlog and margins to improve due to stronger growth in Western Canada and the Federal Infrastructure Program.

ALLIED PROPERTIES REIT (AP_u.TO)
The REIT owns Class I (brick-and-beam) properties located in high-barrier urban markets and has a significant opportunity to create value by pursuing intensification, redevelopment and development.

FERROVIAL (FRRVY.PK)
The company has ownership interests in world-class infrastructure assets including the 407ETR and Heathrow Airport. Concerns regarding rising rates and the performance of the company’s Construction and Services division, which is relatively small, should dissipate as the year progresses.
 

PAST PICKS: FEBRUARY 9, 2016

GILDAN ACTIVEWEAR (GIL.TO)

• Then: $31.55
• Now: $34.04
• Return: +7.89%
• TR: +9.10%

GEORGE WESTON (WN.TO)

• Then: $103.02
• Now: $110.98
• Return: +7.72%
• TR: +9.42%

ENBRIDGE (ENB.TO)

• Then: $44.77
• Now: $55.40
• Return: +23.74%
• TR: +28.98%

TOTAL RETURN AVERAGE: +15.83%