MARKET OUTLOOK:
As we sit here in the middle of November, we expect the market to continue to move higher into the end of the year - bolstered by positive seasonal trends as well as continued fund flows into equities. The economy remains strong as we enter the end of 2021, although we have slowed from the pace of growth seen during the middle of the year. 

All eyes will be on the U.S. Fed and the path of their policy stance into the new year, and if they end up tightening policy sooner and hiking rates to stem inflation. 

The other key thing I am watching into the end of the year is who does U.S. President Biden choose to be the Chair of the Federal Reserve. At this point it seems like Lael Brainard is gaining in probability but a selection should come any time now.

TOP PICKS:

Brookfield Business Partners (BBU-UN TSX)
BBU is the private equity segment under the Brookfield group of companies, and it focuses on business and industrial services companies. We think the stock is trading at a fair valuation close to NAV and we expect the business to generate strong NAV growth over the next few years. 

Coinbase (COIN NASD)
COIN is one of the largest digital asset exchanges with over 70 million users globally. It went public earlier this year via direct listing and we think it is very well positioned to continue growing its business. We are still very early in the adoption phase of the digital asset economy and Coinbase has a number of critical advantages at this stage of the adoption, especially on the regulatory side. So far in 2021, it has earned $4.9B in revenue and $2.8B in net income, for profit margins well over 50 per cent. We think at 20x earnings, this company is at a very attractive multiple relative to the upside in the business.

Franco-Nevada (FNV TSX)
The gold sector has been a disappointment this year with their lacklustre performance but we decided to buy a new position in Franco-Nevada because we expect gold prices to perform well into 2022 as inflation remains and real interest rates remain negative. Franco is in a good position as a royalty company because they will not face the same cost pressures that gold mining companies will face with higher inputs costs.

PAST PICKS: December 7, 2020

Roper Technologies (ROP NYSE)

• Then: $418.98
• Now: $492.15
• Return: 17% 
• Total Return: 18%

AutoZone (AZO NYSE)

• Then: $1157.18
• Now: $1911.25
• Return: 65%
• Total Return: 65%

Suncor (SU TSX)

• Then: $22.88
• Now: $32.04
• Return: 40%
• Total Return: 43%

Total Return Average: 42%