Christine Poole, CEO and managing director of GlobeInvest Capital Management
Focus: North American large caps
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MARKET OUTLOOK

The rise in global equity markets reflects the acceleration in global economic growth in 2017. Continued improvement into 2018 looks sustainable based on economic data points and forward indicators. 

In the United States, tax reform will boost corporate profits, encourage capital investments and support consumer spending. Following upward revisions, consensus earnings per share (EPS) for S&P 500 companies is forecast to rise 12 per cent in 2018, the second consecutive year of double-digit growth. For the TSX Composite, EPS is expected to grow 10.5 per cent this year.   

With tepid inflationary pressures, the removal of central bank accommodation should be measured and non-disruptive to the ongoing recovery. Arguably, stock markets already reflect to some extent the improving macroeconomic backdrop and stronger profit outlook. The prevailing overly bullish sentiment suggests stocks may consolidate; however, positive underlying economic fundamentals supports an overall constructive stance on equities.  

TOP PICKS

NUTRIEN (NTR.TO)
Formed through the merger of Agrium and Potash, Nutrien is the world’s largest fertilizer producer and retailer of crop inputs and services to farmers. Its goal to generate US$500 million in annual operating synergies appears reasonable. Anticipated asset sales will provide cash flow for stock repurchase, dividends and global expansion of Nutrien’s agricultural retail network. Nutrien’s dividend yield is expected to be in the 2.9 per cent range. Recent purchase in $68.95 range in January 2018.

WALT DISNEY COMPANY (DIS.N)
Disney is a media conglomerate and premier content provider, comprised of Cable Networks & Broadcasting (47 per cent of operating income), Parks & Resorts (25 per cent), Studio Entertainment (16 per cent) and Consumer Products (12 per cent). 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 enhances Disney’s content offering and distribution capabilities. Disney provides a dividend yield of 1.5 per cent. Recent purchase at $109 level in December 2017.

FORTIS (FTS.TO)
Fortis is a North American electric and gas utility company, with 96 per cent of its assets regulated and the remaining under long-term contracted power generation operations. Its acquisition of ITC Holdings Corporation, a fully-regulated U.S. electric transmission utility company, significantly increases its footprint in the U.S. Fortis is a stable cash flow generator, posting 43 consecutive years of annual dividend increases. Supported by a backlog of projects, Fortis has targeted average annual dividend growth of six per cent through 2021. Fortis offers a yield of 3.8 per cent. Recent purchase in $45.05 range in January 2018.

PAST PICKS: JANUARY 11, 2017

CGI GROUP (GIBa.TO)

• Then: $65.27
• Now: $67.17
• Return: 2.91%
• Total return: 2.91%

VISA (V.N)

• Then: $81.80
• Now: $119.13
• Return: 45.63%
• Total return: 46.66%

XYLEM (XYL.N)

• Then: $49.40
• Now: $69.65
• Return: 40.99%
• Total return: 42.81%

TOTAL RETURN AVERAGE: 30.79%

TWITTER: @christine_globe
WEBSITE: www.globe-invest.com