David Driscoll, president and CEO of Liberty International Investment Management
FOCUS: Global stocks
MARKET OUTLOOK:
The name of the current game is whether or not reflation becomes long-term inflation. So far this year, Canadian and U.S. government bonds have risen between 10 basis points (5-year bond) to almost 40 basis points (30-year bond), turning real yields positive. This has also been helped along by government transfers. In the U.S., 30 per cent of personal income has come from government cheques to the populace during the COVID-19 outbreak.
Near-term, market pundits expect a continuation of the bull market with GDP rising to five per cent in 2021 if, as expected, we reach 70 per cent herd immunization and people start spending all that money. In an economic recovery, the market leaders tend to be small-cap stocks, resources and industrials. And if the U.S. dollar continues to fall (it was down six per cent against a basket of global currencies last year), U.S. multi-nationals and emerging market stocks should do well. These themes are reflected in our Top Picks.
TOP PICKS:
NUTRIEN LTD. (NTR TSX) is the largest potash and third largest nitrogen producer of fertilizer worldwide. It also owns 1,500 retail stores. If the U.S. dollar falls further in 2021, commodities priced in U.S. will rise, leaving farmers with more money to spend on fertilizer.
THERMO FISHER SCIENTIFIC (TMO NYSE) is a life science company that provides end-to-end fulfillment for biotech firms, pharmaceutical companies and government and institutional research organizations. It sells laboratory equipment such as mass spectrometers and electron microscopes, consumables for laboratory testing and contract manufacturing. It is the cheapest of all the life science stocks. If viruses are the wave of the future, Thermo’s products should continue to be in demand. Finally, half of their revenues come from outside the U.S. so any U.S. dollar weakness will help their earnings.
NOVO NORDISK NV (NVO NYSE) is the world’s largest diabetes care provider. Its semaglutide formula is the latest breakthrough to help control blood sugar in a once-a-week pill so patients can avoid a daily injection. International sales outside the U.S. now account for more than 50 per cent of its sales. As a result, its profits are rebounding and growing.
PAST PICKS: February 7, 2020
PAYCHEX (PAYX NASD)
- Then: $87.98
- Now: $91.13
- Return: +4%
- Total Return: +7%
CHUBB (CB NYSE)
- Then: $162.73
- Now: $164.75
- Return: +1%
- Total Return: +4%
OPEN TEXT (OTEX TSX)
- Then: $61.87
- Now: $62.79
- Return: +2%
- Total Return: +3%
Total Return Average: +5%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| PAYX NASD | Y | Y | Y |
| CB NYSE | Y | Y | Y |
| OTEX TSX | Y | Y | Y |
Website: www.libertyiim.com
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