Full episode: Market Call for Monday, December 14, 2020
Christine Poole, CEO and managing director at GlobeInvest Capital Management
Focus: North American large caps
Stock markets continue to climb higher, reflecting an increasingly brighter economic outlook next year. COVID-19 vaccine distribution is now beginning, with health experts predicating widespread availability to the general population sometime next spring. The successful development of additional vaccines will supplement accessible vaccine supply.
The resurgence of the virus in many countries accompanied by renewed containment measures suggests a moderation in economic growth over the near term. This temporary slowing is cushioned by the extension of government assistance programs which are expected to remain in place until the employment situation in distressed service industries improve.
Over the medium and longer term, a return to economic normalcy means an improving labour market as well as a business cycle and profit recovery. The year-over-year comparisons, especially in the latter half of next year, will be extremely positive particularly for those industries currently suffering from mobility restrictions.
With sentiment indicators near extreme bullish levels, pullbacks are inevitable especially given escalating pandemic worries over the short term. The Georgia Senate run-off election on Jan. 5 remains another risk. Nonetheless, against a backdrop of a recovering global economy, an extremely accommodative monetary policy and declining volatility, sustainable upside for equities is expected next year.
S&P Global Inc. (SPGI NASD) – Purchased in $327 price range on December 2020
S&P Global is a diversified financial information services company operating in four primary segments: Ratings (47 per cent of revenues), Market Intelligence (28 per cent), S&P Dow Jones Indices (13 per cent) and Platts (12 per cent). Its attractive growth businesses are leading players in their respective industries and highly profitable and scalable. The subscription-based nature of some of its services means 70 per cent of its revenue base is recurring. S&P Global provides a dividend yield of 0.8 per cent.
TD Bank (TD TSX) — Purchased in $71 price range on December 2020
TD is a leading North American bank, deriving 57 per cent of its net income from Canadian retail operations, 28 per cent from U.S. retail and 15 per cent from wholesale/capital markets. TD is well-positioned to participate in the economic recovery through better consumer activity and business investment. Its strong capital base provides flexibility to make acquisitions. TD’s current dividend yield is 4.4 per cent.
Unilever (UL NYSE) — Purchased in $58 price range on December 2020
Unilever is one of the world’s leading suppliers of personal care (38 per cent of sales), food (24 per cent), home care (19 per cent) and refreshment (19 per cent) products, reaching 2.5 billion consumers a day in over 190 countries. Its global brands include Dove, Axe, Tres Semmes, Vaseline, Lipton, Knorr and Hellmans. Most of its sales are from emerging markets, making it a beneficiary of the growing middle class in these regions. Unilever provides a dividend yield of 3.9 per cent.
PAST PICKS: DEC. 12, 2019
DollarTree (DLTR NASD)
- Then: $92.55
- Now: $107.80
- Return: 16%
- Total return: 16%
Fortis (FTS TSX)
- Then: $53.31
- Now: $53.31
- Return: 0%
- Total return: 4%
Home Depot (HD NYSE)
- Then: $212.04
- Now: $268.37
- Return: 26%
- Total return: 29%
Total return average: 16%