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

MARKET OUTLOOK

North American equity markets have suffered significant declines over the last several months. However, the reasons for the decline appear to be more psychological than real. Economic growth remains strong, unemployment low, confidence high and corporate earnings growth are excellent. Interest rates still remain low while inflation growth rates are moderate. Equity markets can correct even in the best of times. Investors overuse margin, speculation becomes common and corrections are inevitable. In Canada particularly, the final settlement of USMCA should have brought better markets. With no recessions in Canada or the U.S. on the near term horizon a market rebound should be in the cards.

TOP PICKS

SCOTIABANK (BNS.TO)
Last purchased in November at $72.15.

A Canadian chartered bank with significant exposure in Central and South America. Scotiabank has recently sold operations in the Caribbean that represented higher risk. As the second-largest bank in Mexico, Scotiabank should benefit from the recent trade deal settlement with the U.S. Investment in the higher growth rate regions will equate to superior future earnings performance. Scotiabank has a higher yield and lower price-to-ratio than its Canadian bank counterparts. 

BMO COVERED CALL UTILITIES ETF (ZWU.TO)
Last purchased in November at $12.69.

This ETF provides exposure to an equal with portfolio of utilities, telecoms and pipeline stocks. Additional earnings are generated by writing out of the money call options on securities held. Canadian securities make up 66 per cent of the portfolio with U.S. securities at 34 per cent. Utilities such as Fortis make up 48 per cent of the portfolio while pipelines such as TransCanada make up 25 per cent and telecommunications such as Telus make up 27 per cent. The portfolio is rebalanced in June and reconstituted in December. This ETF provides an excellent yield of 6.6 per cent from a high-quality diversified portfolio.

APPLE (AAPL.O)
Last purchased in November at $179.34.

This multi-national technological company is headquartered in California and designs a broad range of consumer electronics. The recent market price decline of the stock has reduce the price-to-earnings multiple to a low of 15 times. Considering the company's past growth history and the potential for future growth in the consumer electronics sector, this seems to be an opportune time to acquire the stock. 

PAST PICKS

TD BANK (TD.TO)

• Then: $66.13     
• Now: $73.56      
• Return: 11%      
• Total return: 16%

VERMILION ENERGY (VET.TO)

• Then: $40.62     
• Now: $33.06      
• Return:-19%      
• Total return: -12%

ISHARES NORTH AMERICAN TECH ETF (IGM.N)

• Then: $152.53   
• Now: $187.13    
• Return:23%       
• Total return: 24%

Total return average: 9%