David Cockfield, managing director and portfolio manager at Northland Wealth Management 
FOCUS: Canadian equities and ETFs
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MARKET OUTLOOK

The TSX rose to a record high in early November, but since then has moved sideways. The economic background has remained positive in both the U.S. and Canada. The Dow has continued to make new highs and has been encouraged by the prospect of tax cut legislation going through. 

Canadian investors now see an increased probability that NAFTA will not be renewed, particularly with the recent duties applied to Canadian softwood lumber exports. Passage of the U.S. tax legislation should generate a Santa Claus rally in the U.S. that could be reflected in Canadian equity markets.

TOP PICKS

TD BANK (TD.TO)
The second largest Canadian bank with the main focus on retail banking. TD has significant banking operations in the U.S. For several years TD’s U.S. operations have produced mediocre results, until recently. Since we see better growth potential for the banking sector in the U.S. than in Canada, we see TD as deserving of a premium value. Last purchased in December at $72.64.

ISHARES S&P/TSX CAPPED COMPOSITE INDEX (XIC.TO)
This Canadian equity ETF seeks to replicate the performance of the S&P/TSX Capped Composite Index. This ETF provides participation in commodity securities not included in low volatility ETFs. Management fee is a low 0.05 per cent. 12 month trailing yield is 2.76 per cent. Last purchased in December at $25.58.

NORBORD (OSB.TO)
Norbord is one of the largest world producers of oriented strand board (OSB) – a type of engineered lumber made by compressing layers of wood chips and adhesive. The plywood-like product is widely used in the housing industry. The stock offers a way to participate in the U.S. housing industry, which has significant growth potential for at least several years. The stock appreciated rapidly after my previous recommendation in June. Subsequently after topping out at $51.00 the stock has sold off to the low forties. Trading at a low PE of 8.25 per cent and a yield of 5.6 per cent, the stock is again a buy. Last purchased in December at $41.84.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
TD N N Y
XIC N N Y
OSB N N Y

PAST PICKS: FEBRUARY 3, 2017

SUN LIFE FINANCIAL (SLF.TO)

  • Then: $50.57
  • Now: $51.65
  • Return: 2.13%
  • Total return: 5.92%

INTER PIPELINE (IPL.TO)

  • Then: $28.94
  • Now: $27.29
  • Return: -5.70%
  • Total return: -0.67%

SHOPIFY (SHOP.TO)

  • Then: $67.89
  • Now: $131.88
  • Return: 94.25%
  • Total return: 94.25%

TOTAL RETURN AVERAGE: 33.16%
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
SLF Y Y Y
IPL N N Y
SHOP N N N

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WEBSITE: www.northlandwealth.com