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

MARKET OUTLOOK

At the end of the day, stock prices are driven by earnings. So far, we’ve seen reasonably good profits in both Canada and the U.S. for the second quarter and quite good forecasts for the remainder of the year as well. There are obvious concerns with world trade, slowing growth in major economies such as China and the potential disruption from events such as Brexit and tensions with Iran. We believe the Federal Reserve will cut interest rates more as a response to very low bond yields in Europe than due to weak economic conditions in the U.S. This will continue to make stocks the favoured asset class for the rest of the year. Until we see definitive signs of a slowdown reflected in key measures such as unemployment and dropping consumer spending, we expect to maintain our current allocation to equities. 

TOP PICKS

FORTIS (FTS.TO)

Fortis is an operator of regulated utilities in Canada, the U.S. and in Grand Cayman. As a regulated utility focused on electricity, Fortis is one of the safest and least economically sensitive business that exist. Fortis has one of the great dividend growth track records in Canada, having raised dividends every year for the past 45 years. It expects to raise the dividend by another 6 per cent annually through 2023. At 70 per cent, Fortis’s dividend payout is also one of the safest in the industry.

VAIL RESORTS (MTN.N)

Vail is the largest ski-resort operator in the world, with flagship properties including Whistler, Vail and Breckenridge. Quality ski resorts are truly irreplaceable assets: there have been no new major ski areas built in North America for over 35 years. Vail’s strategy revolves around acquiring and upgrading resorts and adding them to the Epic Pass season pass product which reduces Vail’s sensitivity to snow conditions and guarantees the cash flow. Just this week, Vail acquired 17 ski resorts in the Northeast U.S., increasing the value proposition for Epic Pass holders in the Northeast region. We expect Vail to continue to raise prices on the Epic Pass as a must-have product for frequent skiers.

WASTE CONNECTIONS (WCN.TO)

Waste Connections is one of the largest providers of waste services including collection, landfills and recycling services in North America. Waste Connections aims to acquire and own facilities in smaller markets, which tend to have less competition for contract bidding and drive pricing growth. It has acquired over 100 small sites since 2010. We believe that Waste Connections’ decentralized culture is a differentiator, with industry-leading safety metrics in the fifth most dangerous industry. We expect the company to continue to gain share as a consolidator, with smaller providers continuing to face rising cost pressures.

PAST PICKS: AUG. 29, 2018

DISNEY (DIS.N)

• Then: $112.45
• Now: $144.93
• Return: 29%
• Total return: 31%

TFI INTERNATIONAL (TFII.TO)

• Then: $48.26
• Now: $41.94
• Return: -13%
• Total return: -11%

CONSTELLATION SOFTWARE (CSU.TO)

• Then: $962.61
• Now: $1256.21
• Return: 31%
• Total return: 34%

Total return average: 18 %