Bryden Teich, portfolio manager at Avenue Investment Management
Focus: North American equities

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MARKET OUTLOOK

I think certain sectors of the Canadian stock market represent very strong value for long-term investors at today’s levels. Economic growth continues to expand moderately in Canada and the U.S., with the continued push of strong employment trends in both countries. Wage gains are starting to improve, but consumer inflation so far remains muted. Short-term interest rates look poised to move higher as the U.S. Fed continues to normalize interest rates. Long-term inflation expectations, however, remain anchored, so I expect that a further gradual flattening of the yield curve should be expected. This signals that we’re pushing into the later stages of this economic expansion. Over the next six to 12 months there is a cyclical tailwind behind the earnings of major sectors of the TSX Index (financials and energy) and this will provide a strong boost to corporate profits. On this estimation, I believe the TSX should perform strongly over the next year.

TOP PICKS

ALIMENTATION COUCHE-TARD (ATDb.TO)

We like Couche-Tard because of their strong earnings growth after their recent acquisitions. They’re well diversified outside of Canada with 85 per cent of gross profit being generated between the U.S. and Europe. There’s still a large opportunity for them to continue to consolidate the gas bar/convenience store space as it remains highly fragmented south of the border.

WPT INDUSTRIAL REIT (WIR_u.TO)

WPT is an industrial REIT based in the U.S. It yields 5.5 per cent and has very defensive assets.

AIR CANADA (AC.TO)

Air Canada has done a very good job transforming itself over the past several years. They reported strong earnings today and we expect the shares to perform well over the next six to nine months.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
ATDb Y N Y
WPT_u Y N Y
AC Y N Y

 

PAST PICKS: MARCH 1, 2018

ALIMENTATION COUCHE-TARD (ATDb.TO)

  • Then: $62.58
  • Now: $60.04
  • Return: -4%
  • Total return: -4%

BROOKFIELD BUSINESS PARTNERS (BBU_u.TO)

  • Then: $43.91
  • Now: $51.22
  • Return: 17%
  • Total return: 17%

ENBRIDGE (ENB.TO)

  • Then: $40.78
  • Now: $46.28
  • Return: 13%
  • Total return: 15%

Total return average: 9%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
ATDb Y N Y
BBU_u Y N Y
ENB Y N Y

 

WEBSITE: www.avenueinvestment.com