Bruce Campbell, president and portfolio manager at Campbell, Lee & Ross
Focus: Canadian large caps

MARKET OUTLOOK

Market volatility spells opportunity for patient, long-term investors. So far, 2018 has seen the market punishing high-quality dividend-paying investments, while rewarding high-growth stocks with minimal short-term earnings potential like cannabis and smaller tech stocks. As that trade unwinds, the entire market is selling off alongside it. This is offering a great entry point into a number of high-quality stocks. Though we’re still cautious in the short-term and are comfortable having some extra cash in the portfolio, we’re looking for opportunities to deploy that cash as we anticipate the market volatility to continue in the short term.

TOP PICKS

SCOTIABANK (BNS.TO)

The Canadian banks have finally pulled back and Scotia’s recent equity raise had the stock underperforming the sector prior to this pullback. We see great value here at around nine times 2019 earnings and with a dividend yield of almost a 5 per cent. This looks like a good entry point for long-term holders.

ALIMENTATION COUCHE-TARD (ATDb.TO)

A chance to pick up a high-quality company at a depressed valuation, Couche-tard trades at close to 14 times 2019 earnings. The Circle K rebranding effort is going extremely well and same-store sales growth is at its highest level in two years. Synergies from the CST Brands acquisition continue to bear fruit.

NUTRIEN (NTR.TO)

Nutrien has been punished like many others in the current market, but offers great value here. The company plans to sell around $5 billion in equity investments (the recent SQM sale) and will pay down debt, return more dollars to shareholders and ramp up their already successful retail presence.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
BNS Y Y Y
ATDb Y Y Y
NTR Y Y Y

 

PAST PICKS: OCT. 20, 2017

TRANSCANADA (TRP.TO)

TransCanada is caught in the oil and rates downdraft. We continue to believe that new pipelines not getting built make energy infrastructure in Canada more valuable, not less.

  • Then: $61.87
  • Now: $49.41
  • Return: -20%
  • Total return: -16%

WALT DISNEY (DIS.N)

Disney is now a media powerhouse with the addition of the Fox assets. We expect them to start going directly to consumers via a digital/streaming strategy. Eventually, their online offering will compete with the likes of Netflix, except they already own much more valuable content. Also, expect to see ESPN have a more digital-focused strategy to offset the cord-cutting effects.

  • Then: $99.40
  • Now: $113.72
  • Return: 14%
  • Total return: 16%

BB&T CORP (BBT.N)

Despite delivering on all of the earnings expectations and seeing strong loan and deposit growth, BB&T has come under pressure with the rest of the U.S. financials. Expect another 10 per cent earnings growth in the coming 12 months as well as a dividend increase. We view this as a good entry point.

  • Then: $47.50
  • Now: $47.64
  • Return: 0.3%
  • Total return: 3%

Total return average: 1%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
TRP Y Y Y
DIS Y Y Y
BBT Y Y Y

 

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