Darren Sissons, vice-president and partner at Campbell, Lee & Ross
Focus: Global equities and technology

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MARKET OUTLOOK

Heightened political uncertainty remains a major market influencer and is incrementally increasing the risk of the U.S. market and FAANG stocks in particular being over-owned. The Trump administration and its anti-free-trade fear-mongering is driving funds flows to the U.S., a perceived safe haven, at the expense of Europe, commodity-producing nations and emerging markets. The U.S. Federal Reserve’s rising interest rate agenda on the back of an improving U.S. economy has strengthened the U.S. dollar at the expense of most major developed and developing economy currencies. Collectively, these two developments make U.S. investments good for non-U.S. investors and substantially lessens U.S. investor appetite for global equities. Over the near term, the trend is your friend, so buy U.S. equities. For longer-term growth options, however, look to sell-offs in Europe, commodity nations and emerging markets for outsized growth over a three-to-five year period.

TOP PICKS

AIR LIQUIDE SA (AIRP PA)

• Currently the leading industrial gas company in a four-company global oligopoly.
• Synergies from the May 2016 acquisition of Airgas are coming through and Air Liquide is benefiting from stronger U.S. industrial demand.
• Demand for new, large-scale industrial gas projects across the globe remains supportive.
• Air Liquide has a defensive business model that's based on a high percentage of repeatable, contracted, take-or-pay, sales to existing customers.
• Dividend currently yields 2.4 per cent and has grown by an average of 8 per cent in Canadian dollars for 15 years.
• Attractively priced.

SCOTIABANK (BNS.TO)

• Dividend currently yields 4.3 per cent. It has grown by an average of 10.6 per cent for 15 years.
• Scotiabank is effectively 50 per cent Canadian and 50 per cent international, which diversifies the business and provides attractive growth optionality.
• The bank recently made two acquisitions (MD Management and Jarislowsky Fraser), which should add to the wealth management franchise and to earnings over time.  
• Undemanding valuation.   

FRESENIUS SE (FRE DE)

• A global healthcare group based in Germany. It operates four business segments:
  • Fresenius Medical Care, which runs a global network of dialysis clinics providing treatment for patients with chronic kidney failure.
  • Fresenius Kabi, which specializes in intravenously administered generic drugs (IV drugs), clinical nutrition and infusion therapies.
  • Fresenius Helios, a private hospital operator with 130 facilities in Germany and 80 hospitals in Spain.
  • Fresenius Vamed, which manages projects and provides services for healthcare facilities worldwide, from development and turnkey construction to maintenance and total operational management.
• Dividend currently yields 1.1 per cemt and has grown at an average of 12.4 per cenr in CAD for 15 years.
• Defensive business model due to the high percentage of contracted or recurring revenues.
• Attractively priced.
   

PAST PICKS: AUG. 11, 2017

ALGONQUIN POWER (AQN.TO)

• Then: $13.31
• Now: $12.81
• Return: -4%
• Total return: 1%

GENERAL ELECTRIC (GE.N)

• Then: $25.60
• Now: $13.41
• Return: -47%
• Total return: -45%

CK INFRASTRUCTURE HOLDINGS (1038 HK)

• Then: $70.60
• Now: $58.25
• Return: -17%
• Total return: -14%

Total return average: -19%

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