David Baskin, president of Baskin Wealth Management
Focus: North American large caps

MARKET OUTLOOK

U.S. gross domestic product for the fourth quarter was moderately disappointing and other economic signals in the U.S. economy continue to point to a slow rate of growth. In spite of very low unemployment, we see no signs of inflation and have no reason to believe that interest rates will increase in the near future.

Corporate earnings for the fourth quarter have come in much as expected. Under these circumstances, we view most stocks as close to fully priced, with moderate upside expected in special situations where growth is higher than the overall economy. Low interest rates continue to push yield-seeking investors into higher dividend-paying stocks, which continue to present an attractive risk/reward picture.

TOP PICKS

DELTA AIRLINES (DAL NASD)

We think Delta Airlines shares are cheap after falling from fears the coronavirus will impact global travel. The airline industry’s resiliency continues to be underappreciated following years of consolidation. Delta is the best in-class airline, with industry-leading profitability and reliability while a strong balance sheet, non-unionized workforce and diverse revenue streams make it well positioned to weather any potential downturn.

TRICON CAPITAL (TCN TSX)

Tricon Capital is an owner of single-family rental (SFR) houses, owning over 20,000 houses and 7,000 apartments in the U.S. Sun Belt. The SFR industry was created following the financial crisis and scale in technology and maintenance is required to manage a sprawling network of homes. The SFR industry will benefit from demographic tailwinds such as high student debt and delayed household formation rates. As the SFR industry matures, Tricon can shift its revenue streams increasingly to institutional asset management fees, which will increase returns.

CCL INDUSTRIES (CCL/B TSX)

CCL Industries is the world’s largest label maker and the only company with global scale to service multinational giants such as Unilever and Johnson & Johnson as they seek growth in emerging markets. CCL benefits from the trend towards premiumization, as consumer products companies look to redecorate their products using labels to raise prices. The management has historically done a terrific job in making opportunistic acquisitions, and CCL’s clean balance sheet should allow it to make more acquisitions going forward.

PAST PICKS: JAN. 22, 2019

BERKSHIRE HATHAWAY (BRK/B NYSE)

• Then: $200.72
• Now: $225.08
• Return: 12%
• Total return: 12%

BOOKING HOLDINGS (BKNG NASD)

• Then: $1,708.98
• Now: $1,864.51
• Return: 9%
• Total return: 9%

BCE (BCE TSX)

• Then: $55.76
• Now: $62.71
• Return: 12%
• Total return: 18%

Total return average: 10%

TWITTER: @DavidBaskinBWM
WEBSITE: www.baskinwealth.com