Bruce Murray, CEO, CIO and portfolio manager at The Murray Wealth Group
Focus: North American growth stocks

MARKET OUTLOOK

We continue to feel very comfortable invested in a portfolio focused on the social media, healthcare, consumer and technology companies that are leading the market. We believe that this secular trend is far from finished and the market is now a lot less risky as leadership has been determined.

We believe widespread use of artificial intelligence combined with the continuing growth of emerging markets and global trade will still propel the economy forward and keep inflationary pressures under control.

With central banks now having a better understanding of the consequences of reversing quantitative easing, I believe we will see very muted moves from them unless inflation appears.

TOP PICKS

FACEBOOK (FB.O)

Facebook is back on offense after settling a dispute with the FTC. It has several new monetization opportunities (WhatsApp, Instagram payments and Stories) and continues to drive engagement through its platforms with ideas like marketplace, job line and group functions. Operationally, it appears to be catching up or surpassing data and security expectations in anticipation of forthcoming regulation. With antitrust concerns well understood by the market, Facebook is attractive at 21-times 2020 earnings, considering its 20 per cent revenue growth, moderating cost base and strong balance sheet. We have a $234 target on Facebook.

ENBRIDGE (ENB.TO)

Enbridge shares have pulled back on continued pipeline drama this time in Michigan. However, the company has done a good job cleaning up its corporate structure and while its growth rate may slow in the early ‘20s, its dividend should yield more than 7 per cent after a couple of planned increases. Any political resolution on pipelines would be a positive for the shares as would further debt reduction. We think the shares should trade back to $50 level and higher with pipeline approval news.

ROYAL CARIBBEAN CRUISE LINES (RCL.N)

This is a long-term holding as we like the cruise industry’s growth trajectory and Royal Caribbean’s strong execution. The global cruise market still remains a small percentage of total holiday/leisure spending and companies are finding ways to grow its reach through new markets. Royal Caribbean shares trade at 11-times earnings, with forecasted earnings growth of 10 per cent. The market is currently concerned about a potential supply overhang as new cruise ships enter service, but as supply/demand ebbs and flows, the shares could trade as high as 16-times earnings as sentiment improves.

PAST PICKS: JULY 24, 2018

BROADCOM (AVGO.O)

• Then: $217.34
• Now: $297.82
• Return: 37%
• Total return: 42%

BMW (BMWYY.PK)

• Then: $31.74
• Now: $24.77
• Return: -22%
• Total return: -18%

AIR CANADA (AC.TO) 

• Then: $22.09
• Now: $45.67
• Return: 107%
• Total return: 107%

Total return average: 44%