Brian Acker's Top Picks
Brian Acker, president, CEO and chief investment strategist at Acker Finley
Focus: North American large caps
We believe we’re in the middle stages of a secular bull market in the U.S. dollar (now four years since I first started mentioning this on this show). This will ignite the rates of return of all U.S. assets, including equities, real estate and others.
According to Model Price metrics, we believe the S&P 500 has a fair value of 3,648. That’s 30 per cent higher than this index is trading today. Fair value is 4,234 twelve months from July 2018, assuming current earnings estimates.
For a value manager like us, there are many discarded, unloved and broken-down growth story stocks to choose from. If the U.S. economy can struggle along here or, God forbid, accelerates, these value names would produce great rates of return in our opinion.
At the same time, we’re in the midst of ever-increasing interest rates (or interest rates in the U.S. are normalizing). That’s a good thing. Even though it’s 2018, this market has the feel of 1994, which was our last bear market in fixed income. This American equity market will keep on looking over its shoulder at the U.S. Treasury market.
As interest rates make new highs, American equities go into a spasm, a correction, until the U.S. Treasury market settles down. Then equities will try to move higher. Wash, rinse and repeat throughout 2018.
BANK OF AMERICA (BAC.N)
Last purchase at $29.62 on Dec. 20. Upside to Model Price of 9 per cent as of July 16.
Last purchase at $49.89 on Feb. 28. Upside to Model Price of 52 per cent as of July 16.
CISCO SYSTEMS (CSCO.O)
Last purchase at $31.68 on May 31, 2017. Upside to Model Price of 25 per cent as of July 16.
PAST PICKS: JULY 11, 2017
- Then: $145.53
- Now: $190.45
- Return: 31%
- Total return: 33%
- Then: $66.82
- Now: $69.64
- Return: 4%
- Total return: 6%
- Then: $55.53
- Now: $44.49
- Return: -10%
- Total return: -7%
Total return average: 11%