Christine Poole, CEO and managing director at GlobeInvest Capital Management
Focus: North American large cap stocks

MARKET OUTLOOK

Two major events have assuaged the elevated level of uncertainty that has prevailed throughout most of this year.

First, the conclusion of the U.S. election which has resulted in a confirmed Biden victory with a likely legislative gridlock. A more conciliatory president may help to alleviate global trade tensions and relationships. A divided Congress suggests major tax increases and regulatory overhauls will be difficult to implement. Should a different outcome unfold in the weeks to come, a retracement from recent gains in stock markets is highly probable.

Secondly, the announced development of a highly effective COVID-19 vaccine by Pfizer and BioNTech. The apparent breakthrough has not only boosted the stock prices of pandemic-challenged businesses but overall sentiment regarding the visibility and pace of the economic recovery going forward. While future economic risks have subsided sharply, sentiment may be tempered as the near-term economic impact of virus resurgences in most major countries are felt.

So once again, it comes down to monetary and fiscal policy support to provide the financial bridge to when economies can fully reopen. Central banks have affirmed their commitment to near zero interest rates and quantitative easing. Government support programs have largely been extended except in the United States which has yet to approve another stimulus package. A slimmed down package is expected to be forthcoming post-election.

Stock markets are forward-looking and undoubtedly recent events have made the outlook clearer and brighter. Ongoing encouraging news flow related to vaccine development will be supportive for equities. While the logistics and time required to manufacture, distribute and inoculate the global population means the virus will persist well into next year, there is a much more visible path to its eventual eradication and a return to normalcy.

TOP PICKS

Otis Worldwide (OTIS NYSE) Most recent purchase price ~$59.35 on October 2020

Otis is the world’s largest elevator and escalator manufacturing, installation and service company. It is the market leader with a 17 per cent share of the fundamentally attractive global elevator market, operating in over 200 countries with international operations representing 73 per cent of sales. new equipment and service contributes 43 per cent and 57 per cent of sales, respectively and 20 per cent and 80 per cent, respectively of operating profits. Otis provides a dividend yield of 1.2 per cent.

Visa (V NYSE) Most recent purchase price ~$180 on October 2020

Visa is a global payments technology company, operating the world’s largest retail electronic payments network and providing financial institutions with a broad range of platforms for consumer credit, debit, and prepaid payments. Visa benefits from the ongoing global secular shift from cash/cheque to card-based and electronic payments. Visa is also a natural beneficiary in the growth of e-commerce/online retail spend. Visa offers a dividend yield of 0.7 per cent.

WSP Global (WSP TSX) Most recent purchase price ~$85.75 on October 2020

WSP Global provides engineering and design services to clients in the transportation and infrastructure, property and buildings, environment, power and energy, resources  and industry sectors. Through strategic acquisitions, WSP 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 1.7 per cent.

PAST PICKS: NOVEMBER 12, 2019

Fortis (FTS TSX)

• Then: $52.36
• Now: $54.91
• Return: 5%
• Total Return: 9%

Mondelez International (MDLZ NYSE)

• Then: $52.07
• Now: $57.51
• Return: 10%
• Total Return: 13%

YUM! Brands (YUM NYSE)

• Then: $98.34
• Now: $102.07
• Return: 4%
• Total Return: 6%

Total Return Average: 9%