Gordon Reid, president and CEO at Goodreid Investment Counsel
Focus: U.S. equities
MARKET OUTLOOK
Big cap stocks, mostly related to technology, are masking a less dramatic move in market indexes. Cap-weighted indexes (bigger companies have a greater weighting in the index) have entered record territory, but the average stock remains roughly 5 per cent below record levels, and value-focussed indexes are over 10 per cent off their highs. There appears to be a wide divergence between the economy and the stock market. Stay tuned as this resolves itself.
TOP PICKS
Anthem (ANTM NYSE) - Last purchased: August 2020 at US$285
Anthem is a managed care operator with 41 million members. With the tailwind of an aging population and a desperate need to provide health insurance solutions, ANTM will be in the mix. Goodreid expects earnings of US$26 per share in 2021, yielding a P/E of just over 10 times and a free cash flow yield of 8 per cent.
Alphabet (GOOGL NASD) - Last purchased: Aug 2020 @ US$1522
Google’s advertising revenues are taking a modest hit as COVID-19 slows business around the world. While concerning, as the world’s most robust search engine, it is likely that a rebound is in the cards. Expect this company to resume its 15 per cent growth clip. Other revenue sources sprouting from the US$20B annual R&D budget are positive wild cards.
United Rentals (URI NYSE) - Last purchased: Nov 2019 @ US$157
United Rentals is the largest equipment rental company in the world, positioned well for the infrastructure theme that is gaining traction in the U.S., especially under a Democratic administration. Normalized earnings are in the US$20 per share range making this an attractive offering, even though the stock price has rebounded smartly.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| ANTM | Y | N | Y |
| GOOGL | Y | N | Y |
| URI | N | Y | Y |
PAST PICKS: August 22, 2019
Anthem (ANTM NYSE)
- Then: US$261.06
- Now: US$271.52
- Return: 4%
- Total return: 5%
Booking Holdings (BKNG NASD) – Sold March, 2020
- Then: US$1,952.47
- Now: US$1,890.41
- Return: -3%
- Total return: -3%
Cisco Systems (CSCO NASD)
- Then: US$48.18
- Now: US$42.15
- Return: -13%
- Total return: -10%
Total return average: -3%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| ANTM | Y | N | Y |
| BKNG | N | N | N |
| CSCO | Y | N | Y |
Website: www.goodreid.com
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