Christine Poole, CEO and managing director at GlobeInvest Capital Management
Focus: North American Large Caps
The synchronized upturn in the world economy is gaining momentum. The latest business surveys indicate industrial and services activity in the United State, Eurozone, Japan and China remain strong.
After a surprisingly strong first half, recent trade data suggest the Canadian economy will slow to a more sustainable pace. The unemployment rate in September held steady at 6.2 per cent, matching the low of October 2008.
Hurricanes Harvey and Irma will distort U.S. economic data in the latter half of 2017. However, activity should bounce back fairly quickly with reconstruction efforts providing a stimulus to the economy.
Buoyant equity markets reflect the upturn in global activity against a back drop of generally accommodative monetary policy. Interest rates will inevitably trend higher, but with wage and price inflation remaining subdued, the pace is expected to be gradual.
The macroeconomic backdrop remains supportive for earnings growth. The weaker U.S. dollar will also be a tailwind for U.S. multinationals. Q3/17 earnings will be the fifth consecutive quarter of positive earnings growth for the S&P 500 companies. Profit growth is expected to remain positive for the balance of this year and into 2018, excluding the impact of any potential tax cuts.
JOHNSON & JOHNSON (JNJ.N) - Recent purchase price US$133 range in October 2017
JNJ is a global diversified healthcare company, manufacturing a broad range of products within three segments: Pharmaceuticals (47 per cent of sales), Medical Devices and Diagnostics (34 per cent) and Consumer (19 per cent). Approximately 70 per cent of sales are derived from products that have a number one or number two global share. JNJ offers consistent stable earnings and dividend growth. One of a handful of triple-A rated companies left in North America, JNJ has increased its dividend for 55 consecutive years and offers investors a dividend yield of 2.5 per cent.
MONDELEZ (MDLZ.O) - Recent purchase price US$41.15 range in October 2017
MDLZ is the snacking leader with number one global share in biscuits and candy as well as number two in chocolate and gum. By category, biscuits represent 41 per cent of sales, chocolate 30 per cent, gum & candy 15 per cent, cheese & grocery 8per cent and beverages 6 per cent. Its portfolio of leading brands include Oreo, beVita, Cadbury, Toblerone, Trident, Dentyne and Halls. With over 40 per cent of its revenues from emerging markets, Mondelez is well-positioned to benefit from the growing middle class population over the next fifteen years. 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 2.1 per cent.
PEMBINA PIPELINES (PPL.TO) - Recent purchase price $42.70 range in October 2017
Pembina is a diversified energy infrastructure company that operates pipelines, natural gas gathering & processing facilities and midstream businesses. The acquisition of Veresen strengthens PPL’s strategic positioning in the prolific Montney shale formation region and enhances its longer term growth opportunities. PPL offers an attractive 5.0 per cent dividend yield.
PAST PICKS - October 12, 2016
- Then: $57.94
- Now: $51.96
- Return: -10.32%
- Total return: -6.40%
- Then: $41.34
- Now: $45.58
- Return: 10.25%
- Total return: 14.45%
- Then: $160.83
- Now: $176.51
- Return: 9.74%
- Total return: 12.44%
TOTAL AVERAGE RETURN: 6.83%