Benj Gallander, president of Contra the Heard Investment Letter

Focus: Contrarian, value investing
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MARKET OUTLOOK
The Trump rally has been one for the ages. However, given the erratic nature of his policies and the pushback against them, it would not be a surprise to see a major drop in the Dow; 500+ points in one day would not be a shock. Canadian debt, both governmental and personal, is a crisis in the making.

TOP PICKS

FIRST US BANCSHARES (FUSB.C)
This small Alabama-based bank should do well along with others in the sector under the Trump administration. Prior to the recession, it paid a dividend of over $1.00 a year — currently at $0.08 and likely to increase. The stock price previously crested north of $35, about three times the current level.

PENN WEST PETROLEUM (PWT.TO)
Penn West flirted with bankruptcy last year but after selling off assets is in compliance with financial covenants. It plans to have a capital budget program with the goal of increasing production growth by 15 per cent this year. Further asset sales are expected.

AGJUNCTION (AJX.TO)
AgJunction has been hit hard by difficulties in the agricultural sector. Revenues have shrunk dramatically and it had a loss last quarter of over $14 million, of which more than $11 million was goodwill. Fortunately, the company has over $15 million in cash and zero debt, which gives this speculative play an excellent opportunity to recover.
 

PAST PICKS: DECEMBER 1, 2015

ALACER GOLD (ASR.TO)

• Then: $2.57
• Now: $2.92
• Return: 13.62%
• TR: 13.62%

GSE SYSTEMS (GVP)

• Then: $1.79
• Now: $3.08
• Return: 72.11%
• TR: 72.11%

CAPSTONE INFRASTRUCTURE (CSE.TO)

• Then: $3.68
• Takeover by Irving Infrastructure: $4.89
• Return: 32.89%
• TR: 35.67%

TOTAL RETURN AVERAGE: +40.47%