We continue to be watching the economy very closely both in North America and Globally.  Recessions and Bear Markets go hand in hand.  Once the economy goes into a recession, the probability of a Bear Market is close to 100%.  One could argue that the last year has seen Bear Market conditions in the USA (hostile environment for stocks) and a confirmed Bear Market here in Canada.  If the recession is confirmed, more price deterioration could occur. 

Several of the economic data points have been improving over the last few weeks, but we continue to see some warning flags.  Cycle analysis indicates a rebound for the next few months, following this rebound we should be able to assess the real strength of the recovery.    

One by one over the last few weeks many of the market indicators that we follow have improved.  This improvement has occurred while sentiment was pushed to an extreme and remains negatively skewed.  We continue to hold a more defensive positioning with our portfolios.  We are waiting for a few more market indicators to move to positive before we will move to 100% invested. 

So what can reverse this recent market move and derail the recovery?  The USA Dollar is negatively correlated to commodity prices.  If we were to experience a rise in the USA Dollar this would be negative for USA multinational corporations as well as commodity producers and commodity banks.

TOP PICKS:

Convalo Health International (CXV.V)  

The company operates substance abuse treatments facilities in the USA.  The business is a low capex and high margin industry that is extremely fragmented.  They continue to build out their locations and expect to have 5 operations in 4 locations.  The company has a revenue run rate of $40 million and expects to be at a revenue run rate of $100 by year end 2016.  Last purchase was $0.275.

Yellow Pages (Y.TO)

Yellow Pages is a company with a strong franchise that is going through a turnaround following near collapse of the company a few years back.  The new management team has instituted a Return to Growth (RTG) plan where they forecast revenue and EBITDA growth in 2018.  The company recently released results and the management team is executing on the goal of growth in 2018.  The company is generating cash flow and paying down debt.  It trades at 4.5 times EV/EBITDA and generates over $100 million of cash per year.    The last purchase was $19.33, Funds own, but none personally or family.

New Flyer Industries (NFI.TO)

The Company manufactures heavy duty transit buses in Canada and the USA.  The company recently made the acquisition of MCI Motor Coach to diversify their business.  They have been growing the bus business and also the parts business in the last few years.  The stock trades at reasonable multiple of 16 times 2016 EPS.   The last purchase at $29.83.

Past Picks: Apr. 8, 2015

Vogogo (VGO.V)

Guestlogix (GXI.TO) - Delisted

Convalo Health International (CXV.V)

Total Return Average : -78.74%