Brian Madden, senior vice president and portfolio manager at Goodreid Investment Counsel

FOCUS: Canadian stocks


Economic recovery is well established. Commodities have roared back from last year’s abyss, with some firmly entrenched in secular bull markets and others enjoying the early-mid stages of a cyclical bull market. Fiscal stimulus cheques are in the mail in the United States, job gains are piling up month after month and Congress is considering an extremely ambitious US$2 trillion infrastructure spending bill. Not surprisingly, these signs of robust economic activity have caused a stir in the bond markets, with some suggesting that the recent steep selloff in bonds puts the current bull market in stocks at risk. 

We fervently disagree. Risk free interest rates have indeed risen quickly, but remain at benign levels, and more importantly overall monetary conditions remain super accommodative. The ‘bond market vigilantes’ heroicized in the mid-1990s have been overpowered by coordinated, unprecedented and massive monetary interventions by the major central banks of the world. Our best counsel to investors is patience and an even temperament. Style, size and sector rotations can and will occur within the markets, and a great deal of ink will be spilled prognosticating about what it all means, but we believe investors will be better served by resisting the urge to draw sweeping conclusions based on daily gyrations in the markets and the related news flow.


Brian Madden's Top Picks

Brian Madden, senior vice president and portfolio manager at Goodreid Investment Counsel discusses his top picks: Transcontinental, Canada Goose and Bank of Nova Scotia.

Transcontinental Inc. (TCL/A TSX) latest purchase March, 2021 @ $21.55

Transcontinental is Canada’s largest commercial printing company and is slowly transforming itself into a significant player in the flexible packaging industry as well via a series of large and small acquisitions since 2012. The company has rationalized its network down to 26 modern, efficient printing plants and 12 packaging plants across North America and Latin America. Transcontinental earns a healthy return on shareholders equity of 13 per cent, a figure that should rise nicely as the cyclically depressed printing business recovers alongside the economy. With a four per cent dividend yield, a long history of consistent dividend growth and with the shares trading at just 10x expected earnings, Transcontinental exemplifies quality, industry leadership, value and cyclicality, all attributes that we believe will find favour among investors this year.

Canada Goose (GOOS TSX) latest purchase March, 2021 @ $49.86

Canada Goose sells luxury branded outer apparel and is best known for its iconic down-filled winter parkas. The company has traded publicly since 2017 but has been operating for sixty years and is closely held with its CEO and a private equity firm owning 46 per cent of the shares. The company has grown sales at a 33 per cent compound rate over the last three years as they expand geographically in Asia, Europe and the United States and expand their direct-to-consumer and e-commerce channels. By insourcing manufacturing and by shifting sales from third party stores to their own channels, the company’s operating profit margins have been improving steadily. After a blowout set of third quarter financial results, a recent pullback in the shares affords an attractive entry point into the stock which trades at 32x earnings vs. its longer term average of 40x.

Bank of Nova Scotia (BNS TSX) latest purchase March, 2020 @ $80.10

Scotiabank is Canada’s third largest bank and is the nation’s most globally ambitious bank, with a long established footprint in Mexico, Latin America and the Caribbean. Scotiabank earns an 11 per cent return on shareholder’s equity on its current cyclically depressed earnings and has grown earnings per share at a five per cent compound rate over the 2008-20 cycle, with commensurate increases in its dividend. The company has the largest exposure to fast growing and “underbanked” emerging markets among the big six banks. After a flurry of acquisitions in 2018-19, including BBVA’s Chilean bank, two other South American banking deals and two large asset management acquisitions here in Canada with the purchase of Jarislowsky Fraser and MD Management, Scotia has recently pruned non-core smaller assets and is poised to harvest synergies and growth opportunities in the acquired assets. Trading at 11x expected earnings and yielding 4.6 per cent, we see a logical and visible path to a double digit return over a cycle in the shares of Scotiabank.




PAST PICKS: April 9, 2020

Brian Madden's Past Picks

Brian Madden, senior vice president and portfolio manager at Goodreid Investment Counsel discusses his past picks: Alimentation Couche-Tard, Royal Bank and CGI Group.

Alimentation Couche-Tard (ATD/B TSX)

  • Then: $35.42
  • Now: $41.20
  • Return: 16%
  • Total Return: 17%

Royal Bank (RY TSX)

  • Then: $88.25
  • Now: $116.74
  • Return: 32%
  • Total Return: 38%


  • Then: $84.13
  • Now: $105.87
  • Return: 26%
  • Total Return: 26%

Total Return Average: 27%




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