MARKET OUTLOOK:

Both the equity and bond markets are grappling with the uncertainty around the quantum and persistence of inflation, and in turn, what central bank responses may be. In this uncertainty, we advise investors to probability-weight a range of future outcomes and consider what might change, and what might stay the same. 

Within equities, investors should consider defensible business models and free cash flow contribution. Companies strong in these attributes, especially those with a clean balance sheet, can be nimble in a changing macroeconomic environment and reward shareholders with rising dividends.

TOP PICKS:

Unilever (UL NYSE)
Global consumer packaged goods conglomerate. Stock has been range bound since 2017. Going forward, the strategic plan is focused on investing in ecommerce and focusing on high growth segments: Prestige beauty and functional nutrition. Should benefit from reopening in emerging markets, as this accounts for >50 per cent of revenue.

Danaher (DHR NYSE)
U.S. healthcare large-cap with offerings in diagnostic automation, genomic medicine, and water quality. Revenues grew Q/Q by 23 per cent and they are on track to generate ~$US8B of free cash flow in fiscal 2021. Continue to successfully integrate large acquisitions Cytiva (GE Biopharma) and Aldevron.

Globus Medical (GMED NYSE)
US Healthtech mid-cap specializing in surgical robots. Recently received FDA clearance for imaging and navigation tool, ExcelsiusGPS. While international sales have been slower (-7.2 per cent y/y) due to elective surgeries being postponed, U.S. sales grew by 8.8 per cent. The company has yet to initiate a dividend but has ~US$1B in cash and equivalents and no debt.