Christine Poole, CEO and managing director of GlobeInvest Capital Management

Focus: North American large caps

MARKET OUTLOOK:

Accommodative central bank policy and additional fiscal stimulus provide a favourable backdrop for equities. The rollout of vaccine distribution programs globally combined with a more structured testing protocol in many countries is crystallizing the prospect of economies reopening later this year.     

The path to recovery will undoubtedly be bumpy, but assuredly economic conditions will be much improved from last year. While the recent increase in Treasury bond yields and steepening yield curve is causing some angst, it is also a sign of a strengthening growth outlook. From a historical perspective, bond yields remain very low with the 10-year U.S. Treasury Inflation-Protected Security (TIPS) still in negative territory.    

Better than expected corporate earnings for the S&P 500 companies have also been a tailwind for stocks with Q4 2020, marking the first quarter of year-over-year earnings growth since Q4 2019. Continued profit growth will be necessary to sustain elevated valuation multiples.

Market pullbacks are inevitable and healthy at times to rein in overexuberance. We will take advantage of price dislocations to purchase companies well-positioned to grow through the cycle.   

TOP PICKS:

Linde plc (LIN NYSE) recent purchase $249.90 range in February 2021

Linde plc is the largest industrial gas company worldwide, serving a diverse group of industries and geographies. While its business model has proven to be relatively recession resilient, Linde is positioned to benefit from an improving global economy as well as attractive secular growth end markets including healthcare, electronics, and clean energy. Linde just recently increased its dividend and provides a yield of 1.7 per cent.

Mondelez International (MDLZ NYSE) recent purchase price $54.75 range in February 2021

Mondelez is a global snacking company with top category market shares in biscuits, chocolate and candy. Biscuits represent 43 per cent of sales, chocolate 32 per cent, gum and candy 13 per cent, cheese and grocery 7 per cent and beverages 5 per cent. Its portfolio of leading global brands include Oreo, beVita, Ritz, Cadbury, Toblerone, Trident, Dentyne and Halls. With close to 40 per cent of its revenues from emerging markets, Mondelez is well-positioned to benefit from the growing middle-class population in these regions. Per capita consumption of confectionary and biscuits in developing countries are significantly below that of developed countries and is expected to increase as personal income levels rise. Mondelez provides investors with a dividend yield of 2.3 per cent.

WSP Global (WSP TSX) recent purchase price $116 range in February 2021

WSP Global provides engineering and design services to clients in transportation and infrastructure, property and buildings, environment, power and energy, resources and industry sectors. Through strategic acquisitions, WSP Global has expanded its global presence with Canada representing 16 per cent of revenues, Europe/ME/India/Africa 35 per cent, Americas 33 per cent and Asia Pacific 16 per cent. WSP is committed to its proven growth strategy of being a consolidator within a fragmented industry, continuous margin improvement and pursuing organic growth while maintaining a strong balance sheet. WSP offers a dividend yield of 1.3 per cent.

PAST PICKS: February 13, 2020

CGI Inc. (GIB/A TSX)

• Then: $102.11
• Now: $97.70
• Return: -4%
• Total Return: -4%

Walt Disney Co. (DIS NYSE)

• Then: $140.90
• Now: $184.09
• Return: +31%
• Total Return: +31%

United Technologies (UTX NYSE) Now Raytheon (RTX NYSE)

• Then: $153.06
• Now: $73.67
• Return: -18%
• Total Return: -16%

Total Return Average: +4%

Twitter Handle: @christine_globe

Company Website: www.globe-invest.com