MARKET OUTLOOK:
North American equity markets are slightly off their all-time highs, but under the surface we have been seeing an acceleration in market breadth. This increase in breadth should lead to higher markets over the months to come.   

The technical indicators that we follow peaked in March and April of 2021 and then corrected up until September of this year. In the last two months, we have seen a continuous improvement in market breadth. In particular, the mid-cap and small-cap company shares have been gaining relative strength over their large cap peers.

This broad-based market participation should have more companies’ share prices appreciating. The improvements in market breadth can be attributed to strong and improving economic indicators throughout much of the world.

On top of the economic and technical improvements, we are now in the strongest seasonal period for markets, which runs from the end of October to the start of May.  

During the last 18 months, sector rotation changes have been frequent and positioning in the correct sectors has been important for portfolio returns. Each month we review our top-down indicators and assess the sector rotation during our monthly webinar. 

TOP PICKS:

Nurosene Health (MEND CSX)
Nurosene is a technology and healthcare company focused on brain health using AI, brain biology and technology to drive their 4-revenue stream model. They have successfully closed their first acquisition of Netramark (AI platform) to work with pharma companies to develop precision pharmaceuticals. Their direct-to-consumer app is building a recurring subscription revenue stream and their corporate wellness and athletic performance divisions will roll out in 2022. Last purchase was $2.35.

Quipt Home Medical (QIPT TSXV)
Quipt is focused in the USA home healthcare industry serving chronically ill patients with multiple disease conditions. The company has been growing organically and via acquisition. Quipt has historical 10 per cent organic growth with a 22 per cent EBITDA margin. They have $31 million cash on hand and a credit facility for future acquisitions. The stock is attractively valued at 6 times 2022 EBITDA with peers in the 10-15 times range. Last purchase was $8.39.

Kinaxis Inc (KXS TSX)
Kinaxis is a leading provider of supply chain planning software sold to large global enterprises under a software as a service model. COVID-19 has resulted in multiple supply chain challenges and Kinaxis software helps customers streamline their logistics. Their RapidStart deployment and COVID-19 has been garnered a record number of new customer wins which the street expects will continue. Last purchase was $205.88.