Bruce Campbell, president and portfolio manager at Campbell, Lee & Ross

Focus: Canadian large caps
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MARKET OUTLOOK
Canadian equity markets have been a huge disappointment year-to-date and make up a different kind of animal than that with which our American counterparts have to contend. Energy and financials dominate the TSX by weight, being over half in just the two industries. So, going to the U.S. and Europe for diversification does make sense. In the first part of the year, the unexpected strength in the loonie has wiped away the returns from those markets, and so overall Canadian-dollar returns are fairly flat. We believe the Canadian dollar is overvalued and will give back a decent chunk of its rise, and so we stay well-invested outside of Canada. In our domestic market, Canadian banks have underperformed but we think that will reverse in the second half of the year, which has already begun with Q3 earnings having started last week. Also, energy appears to be at least stabilizing and the area is oversold, so there may be some bounce back. If you play here, stick to good balance sheets that can weather $40 oil, if that happens.

TOP PICKS

BANK OF NOVA SCOTIA (BNS.TO)
The most international bank with good growth outside of Canada. No longer trading at a premium to the group. A likely dividend increase coming shortly.

PEMBINA PIPELINE (PPL.TO)
Good growth coming from the Veresen acquisition. A good yield and excellent valuation. One year target of $48 or plus 20 per cent.

SNC-LAVALIN (SNC.TO)
Has excellent growth coming. The lowest valuation of its peers. The 407 highway provides an ongoing, stable source of earnings and cash flow.
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
BNS Y Y Y
PPL Y Y Y
SNC Y Y Y


PAST PICKS: OCTOBER 28, 2016

MANULIFE (MFC.TO) – Still like and own for growth and exposure to higher rates

  • Then: $19.36
  • Now: $24.36
  • Return: 27.22%
  • Total return: 31.52%

ALGONQUIN POWER (AQN.TO) – A growthy yield play

  • Then: $11.78
  • Now: $13.51
  • Return: 14.68%
  • Total return: 18.83%

CN RAIL (CNR.TO) – Good way to have exposure to North American economic growth

  • Then: $84.45
  • Now: $98.87
  • Return: 17.07%
  • Total return: 18.51%

TOTAL RETURN AVERAGE: 22.95%
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
MFC Y Y Y
AQN Y Y Y
CNR Y Y Y


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