Jamie Murray, portfolio manager and head of research, The Murray Wealth Group
FOCUS: North American equities
MARKET OUTLOOK:
The Murray Wealth Global Equity Growth Fund was a top-performing fund in the recent RBC Fund Survey. This is due to our disciplined approach and fundamental company-first approach.
We believe great companies will navigate the volatile economies in a post-COVID-19 world. Despite strength in U.S. gross domestic product (GDP) releases, inflation remains an issue as does a bifurcated consumer. This begs the question of whether central governments have done enough to quell inflation expectations or if inflation will re-accelerate. We continue to observe disinflationary forces in the commodities, goods, and labour market with only the services and real estate sector yet to fully roll over back to the two per cent level. April’s inflation reading is another data point that the U.S. Federal Reserve’s bias should be towards cutting. Earnings are the strongest driver of future stock price performance and earnings are increasing. Stay long.
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TOP PICKS:
3i Group (TGOPY OTC)
3i is an investment holding company. Its largest investment by far is in European discount retailer Action, making up close to 75 per cent of its share value. Action is one of the best retailing concepts we have seen with growth rates averaging 25 per cent over the last decade. It checks all the boxes we want when it comes to discount retailing, low prices, a repeatable growth strategy, scale benefits and low capital intensity. We believe Action will grow at a mid-teens rate for the next five years. Beyond Action, 3i has several promising investments that may turn into long-term winners, but Action is the star here. We own the ADR but there is better liquidity on the London Stock Exchange.
UnitedHealth Group (UNH NYSE)
UnitedHealth Group is a dominant health insurer in U.S. focused on Medicare Advantage, employers and personal plans. After two tough years, we believe Medicare Advantage is moving to a harder pricing market which should benefit UnitedHealth. As well, we believe healthcare costs pressure is at peak levels with poor sentiment as the U.S. heads into an election year. United Health has the lowest cost to serve thus it stands to benefit the most from improving market conditions. The company should grow earnings per share (EPS) around 15 per cent through 2027 and trades at just 17 times price-earnings ratio.
Flagship REIT (MHC.U TSX)
Flagship owns manufactured housing communities throughout the eastern U.S. Manufactured housing is an affordable option for many low-income workers in smaller urban centers, and Flagship has done a good job improving the occupancy rates of its properties. Flagship is very acquisition driven and benefits from buying lots in need of minor capital investment that previous owners were unwilling to make which improves the long term financial returns. Flagship has a low payout ratio and a strong balance sheet with debt maturities mostly occurring post-2030. The shares yield four per cent.
PAST PICKS: APRIL 27, 2023
Adyen ADR (ADYEY OTC)
- Then: US$16.08
- Now: US$13.92
- Return: -13%
- Total Return: -13%
Gibson Energy (GEI TSX)
- Then: $22.49
- Now: $22.83
- Return: 1%
- Total Return: 9%
Morgan Stanley (MS NYSE)
- Then: US$90.26
- Now: US$99.80
- Return: 10%
- Total Return: 16%
Total Return Average: 4%
DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
---|---|---|---|
ADYEY OTC | Y | Y | Y |
GEI TSX | Y | Y | Y |
MS NYSE | Y | Y | Y |