Brett Girard, chief financial officer and portfolio manager at Liberty International Investment Management
Focus: Global equities
MARKET OUTLOOK
After a strong start to 2019, we saw equity markets peak and stumble in July. Since then geopolitics and slowing global growth have been the headwinds the market needs to move past to make new highs. The stimulus that has propped up the global markets for the last decade (and counting) is losing its efficiency as stock markets around the world become more and more accustomed to this support. Compounding this, there is potential for multiple situations where partisan games are the stick in the spokes of further government intervention in Canada (#Wexit) and abroad (China-U.S. tariffs, Brexit, Hong Kong and most recently Turkey).
On the macro side, manufacturing continues to be weak while full-time employment is bolstering spending in the services sector. This dichotomy is creating confusion among investors as they decide whether to seek growth or shelter.
From our perspective what has and will not change is the opportunity for investing in high quality management teams with business models that can consistently create and grow free-cash flow. Investors will, over the long-term, do well by investing in companies that focus on free-cash flow as it affords the ability to buy back shares when stock prices are low, raise dividends, invest in research and development and have a cushion when industry conditions deteriorate.
TOP PICKS
TD BANK (TD:CT)
Last purchased on Oct. 17, 2019 at $73.92.
Our only Canadian bank holding. Their three lines of business are well-positioned relative to the other members of the big five banks. Wealth and insurance continue to propel Canadian retail, the U.S. retail side continues to grow as there are now more branches in the Northeast U.S. than in all of Canada. Capital markets continue to benefit from, on a relative basis, the under-index on oil and gas banking. Over the last 12 months shares have been up slightly (four per cent) but the dividend has grown by 10 per cent per annum for the last 10 years. Management is now authorized to repurchase about two per cent of shares outstanding.
DANAHER (DHR:UN)
Last purchased on Oct. 18, 2019 at $138.16.
Private-equity like company in the life sciences, diagnostic and environmental space. Having recently spun out the slower growing dental segment, Envista Holdings, Danaher is now focused on paying down the debt associated with the $20 billion acquisition of the GE BioPharma unit. Shares are up about 40 per cent year-to-date and the dividend has grown by 2 per cent per annum for the last five years.
INTERTEK (ITRK LON)
Last purchased on Oct. 17, 2019 at $49.54
A UK-based multinational specialist in inspection, product testing and certification. With over 1,000 labs in 100 countries, the company offers recession-resistant mission critical services ensuring that everything from the food we eat, to the drugs we take, to the goods crossing our borders are safe and up to standards. Not only is the stock price up 15 per cent over the last 12 months but dividends have a 17 per cent compound annual growth rate over the last five and 10 years.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| TD | Y | Y | Y |
| DHR | Y | Y | Y |
| ITRK | Y | Y | Y |
PAST PICKS: JULY 29, 2019
ROPER TECHNOLOGIES (ROP:UN)
- Then: $361.31
- Now: $332.95
- Return: -8%
- Total return: -8%
ATRION CORPORATION (ATRI:UN)
- Then: $755.75
- Now: $830.70
- Return: 10%
- Total return: 10%
MONEYSUPERMARKET.COM (MONY LON)
- Then: GBP £363
- Now: GBP £343
- Return: -5%
- Total return: -5%
Total return average: -1%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| ROP | Y | Y | Y |
| ATRI | Y | Y | Y |
| MONY | Y | Y | Y |
Advertisement