Bruce Campbell's Top Picks: August 13, 2020

Bruce Campbell, chairman, Campbell, Lee & Ross 
Focus: Canadian stocks

MARKET OUTLOOK

Markets have had an impressive recovery from the March lows. In the U.S., megacap tech in about 5 stocks is responsible for the lion’s share of the recovery. There are still many stocks and industries that are lagging; financials, energy and cyclicals are the big laggards. This does mean that there are pockets of value that can still be bought. In Canada, golds and Shopify are dragging the market along with them. Shopify has passed Royal Bank as the heaviest weight and golds are now roughly 12 per cent of the index. These trends usually end badly; it is a matter of when as they can continue for a long time. Given that backdrop, we are searching for a combination of growth and reasonable value in industries that will benefit in the new world going forward.

TOP PICKS

Saputo (SAP TSX)

The leading cheese/dairy company in North America and with some international exposure. Good cost control and operational efficiencies along with small price increases allowed them to report a solid quarter last week along with a dividend increase. It appears there are now acquisitions to be made going forward. A new name for us, bought last week before and during the earnings report in the $33 range.

Restaurant Brands International (QSR TSX)

The parent company of Tim Hortons, Burger King and Popeye’s; recovering well from Covid-19. Tim’s has a lot of drive-thru and their on-line sales are booming. Burger King has kept same-store sales flattish year-over-year and Popeye’s is up 20 per cent plus, the new chicken sandwich is rolled out this September in Canada. Last purchases were recently at $74. Stock is still 30 per cent below a year ago.

Medtronic (MDT NYSE)

They are among the largest medical device companies in the world. With operations in 150 countries, their products treat 70 health conditions and include cardiac devices, cranial and spine robotics, insulin pumps, surgical tools and patient monitoring systems. With the postponement of a lot of procedures during Covid, earnings have taken a hit but they are beginning to recover and most of the heart and brain procedures will be done going forward. Last purchases were done in May at US$97.
 

Enbridge (ENB TSX)

• Then: $47.61
• Now: $43.83
• Return: -8%
• Total return: 0%

Manulife (MFC TSX)

• Then: $24.02
• Now: $20.45
• Return: -15%
• Total return: -10%

Visa (V NYSE) 

• Then: US$180.33
• Now: US$198.48
• Return: 10%
• Total return: 11%

Total return average: 0%