David Dietze, founder, president and chief investment strategist at Point View Wealth Management 
Focus: U.S. equities

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MARKET OUTLOOK

Earnings are projected to be up 17 per cent year over year, but close to 8 per cent of that is due to the U.S. tax cut.

  • Much is already expected as companies falling short are punished more that companies beating are rewarded.
  • Much is due to macro factors like rising rates, higher energy prices and a weaker dollar.
  • Remember that earnings are backward looking, and investors must listen carefully to full-year outlooks, which may be adversely impacted due to trade concerns.
  • Earlier last week the spread between the two year and 10-year U.S. Treasury narrowed to just 47 basis points, the narrowest since 2007.
  • An inverted curve is a sure predictor of recession.
  • Questions abound as to why the yield on the 10-year Treasury doesn’t rise further:  Investors foresee little inflation? Excess liquidity coming in from overseas?

TOP PICKS

CVS HEALTH (CVS.N)

One of America’s largest drug store chains, CVS Health is expanding its role in pharmacy benefits, walk-in clinics and now has launched a bid for one of America’s largest insurers, Aetna, thus vertically integrating its business. The stock is cheap at just over 10 times earnings, 3 per cent yield, low debt and low payout ratio.

SANDERSON FARMS (SAFM.O) 

America’s third largest poultry producer, Sanderson Farms is riding the wave of healthy protein. It’s cheap at under 10 times earnings, plus no net debt. The stock is off by more than a third, partly due to concerns over trade wars. If the worst case materializes, we think further downside is less than if the concerns blow over.

ASA GOLD & PRECIOUS METALS (ASA.N) 

ASA Gold is a closed-end fund with 35 solid gold and other precious metal miners. Trading at a 15 per cent discount to net asset value, this gives cheap exposure to a historic hedge on geopolitical turmoil, financial market volatility and currency depreciations. Buy now when others are chasing tech stocks with nosebleed valuations.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
CVS Y Y Y
SAFM Y Y Y
ASA Y Y Y

 

PAST PICKS: SEP. 5, 2017

PFIZER (PFE.N)

  • Then: $33.80
  • Now: $37.03
  • Return: 9.55%
  • Total return: 11.57%

CHEVRON (CVX.N)

  • Then: $109.44
  • Now: $125.92
  • Return: 15.06%
  • Total return: 17.30%

GENERAL ELECTRIC (GE.N)

  • Then: $24.76
  • Now: $14.33
  • Return: -42.12%
  • Total return: -40.65%

Total return average: -3.92%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
PFE Y Y Y
CVX N Y Y
GE Y N Y

 

WEBSITE: ptview.com