Christine Poole, CEO and managing director at GlobeInvest Capital Management

Focus: North American large cap stocks


MARKET OUTLOOK:

Significant monetary and fiscal policy support combined with the swift development of several approved COVID-19 vaccines have resulted in a stronger than expected economic rebound. The wide disparity amongst countries on vaccination rates means the global recovery may be somewhat uneven initially albeit vaccine availability and logistics will eventually be resolved leading to a more synchronized pace.  

The Biden administration has taken decisive actions to provide additional sizeable stimulus measures and ensure a timely vaccine rollout. A rising and steepening U.S. Treasury yield curve is signaling a strengthening economic outlook. The coincidence of pent-up demand as the economy reopens and supply chain bottlenecks suggests elevated inflationary pressures over the near term, especially in comparison to depressed levels a year ago. Over the longer term, supply chains will re-balance and other factors such as demographics, increasing adoption of technology and automation in business processes, and historically high fiscal deficits should keep inflation relatively contained. 

The improving corporate profit outlook is supportive for equities. Undeniably, equity markets already reflect to some degree the improvement with 2021 consensus earnings per share (EPS) for the S&P/TSX and S&P500 companies now expected to exceed reported 2019 EPS. Corporate earnings are strongly leveraged to economic momentum and correlated with industrial activity, both of which are on a robust upswing. As well, excess household savings bode well for a consumer-led recovery in the services sectors when economies reopen.

Consensus forecasts 24 per cent year-over-year Q1/21 EPS growth for the S&P500 companies, accelerating to over 50 per cent in Q2/21 and then moderating in the second half of the year, for an overall annual EPS growth rate of 26 per cent. Meeting expectations will be a key catalyst for further stock price gains.

TOP PICKS:

Christine Poole's Top Picks

Christine Poole, CEO and managing director at GlobeInvest Capital Management, discusses her top picks: Royal Bank, Disney and Brookfield Asset Management.

Brookfield Asset Management (BAM/A TSX) recent purchase price $56.75 range in April 2021

Brookfield Asset Management is a global alternative asset manager with over $600 billion in assets under management. The company owns and operates assets on behalf of shareholders and clients with a focus on property, renewables, infrastructure, private equity, and credit. Brookfield Asset Management seeks to invest in long-life, physical assets that typically benefit from some form of barrier to entry, regulatory regime or competitive advantages that provide for relatively stable cash flow streams. The stock offers a modest dividend yield of 1.1 per cent.

Disney (DIS NYSE) recent purchase price $185.95 range in April 2021

Disney is a media conglomerate and premier content provider, comprised of media networks, parks and resorts, studio entertainment, consumer products and direct to consumer. Its strong global brand portfolio including Disney, ESPN, Pixar, Marvel, and Lucas Film supports a multi-platform strategy to exploit content and intellectual property across Disney’s business segments. The acquisition of 21st Century Fox significantly enhanced Disney’s content offering and distribution capabilities. The successful November 2019 launch of Disney+, its direct-to-consumer streaming service, marks a new growth path for the company.  

Royal Bank (RY TSX) recent purchase price $116.70 range in April 2021

Royal Bank’s diversified business mix consists of personal and commercial lending (45 per cent of earnings), capital markets (25 per cent), wealth management and insurance (26 per cent) and investor and treasury services (four per cent). Geographically, Canada accounts for 58 per cent of revenues, the U.S. 25 per cent and International 17 per cent. The stock provides investors with a current dividend yield of 3.7 per cent.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
 BAM/A TSX
DIS NYSE 
 RY TSX

 

PAST PICKS: May 13, 2020

Christine Poole's Past Picks

Christine Poole, CEO and managing director at GlobeInvest Capital Management, discusses her past picks: Algonquin Power, Otis and Mondelez.

Algonquin Power (AQN TSX) 

  • Then: $18.58
  • Now: $20.24
  • Return: 9%
  • Total Return: 14%

Mondelez (MDLZ NYSE)

  • Then: $49.56
  • Now: $58.87
  • Return: 19%
  • Total Return: 21%

Otis Worldwide (OTIS NYSE)

  • Then: $48.21
  • Now: $70.95
  • Return: 47%
  • Total Return: 49%

Total Return Average: 28%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
 AQN TSX  Y
 MDLZ NYSE  Y
 OTIS NYSE  Y

 

Twitter Handle: @christine_globe

Company Website: www.globe-invest.com