Gordon Reid, president and CEO of Goodreid Investment Counsel
Focus: U.S. equities

MARKET OUTLOOK

While Goodreid believed the fourth quarter correction was overdone, we weren’t prepared for the dramatic snapback that we witnessed in January. Partly technical, but also spurred by a reversal in approach by the U.S. Federal Reserve, January’s market performance was the strongest since 1987. This year could well see a more tepid economic and corporate performance, but in a reversal from 2018, market performance may surprise to the upside.

TOP PICKS

FACEBOOK (FB.O)
Latest purchase on January 2019 at $133.

Mobile advertising is the foundation of growth for Facebook. Their social networking offerings are highly coveted, reach billions of consumers and benefit as the hardware and software ecosystems steadily develop. The stock has become quite attractive as the company was the target of critics, but it has grown into its valuation, currently at about 20 times this year’s earnings.

HOME DEPOT (HD.N)
Latest purchase on January 2019 at $172.

Home Depot revenues eclipsed $110 billion in 2018, up over 50 per cent from the days of the financial and housing crisis in the U.S. Perhaps even more impressive is that operating margins have gone from 9 per cent in 2008 to 16 per cent today, resulting in exploding profitability that has supported very strong advancements in the price of Home Depot’s shares. A sub 20-times multiple and an attractive 2.5 per cent dividend yield illustrate Home Depot’s attractiveness.

LENNAR (LEN.N)
Latest purchase on October 2018 at $40. 

If the Federal Reserve follows through with its signal to slow rate hikes dramatically, the homebuilders are likely to do well. At seven times estimates for 2018 and trading below book value, Goodreid believes this and other homebuilders represent excellent value.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
FB Y N Y
HD Y N Y
LEN N Y Y

 

PAST PICKS: JAN. 30, 2018

DISNEY (DIS.N)

  • Then: $110.11
  • Now: $111.41
  • Return: 1%
  • Total return: 3%

HEXCEL (HXL.N)

  • Then: $67.55
  • Now: $69.66
  • Return: 3%
  • Total return: 4%

TIME WARNER (TWX.N)

Acquired by AT&T (T.N) on June 15, 2018.

  • Then: $94.45
  • Now: $98.77
  • Return: 5%
  • Total return: 5%

Total return average: 4%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
DIS Y N Y
HXL N Y Y
TWX N N N

 

FUND PROFILE

Goodreid’s North American Balanced

Goodreid’s balanced approach allows investors to participate in the potential growth of equity holdings while mitigating risk through ownership of quality fixed income instruments.

Performance as of: Dec. 31. 2018

  • 1 year: -2.4% fund, -6.6% index
  • 3 years: 4.9% fund, 3.6% index
  • 5 years: 6.3% fund, 3.4% index

INDEX: Equity Balanced Category Average.
Returns are net of fees, include reinvested dividends and are annualized.

TOP 5 HOLDINGS

  1. Canadian equities: 31%
  2. U.S. equities: 39%
  3. Canadian fixed income: 19%
  4. Cash: 11%

WEBSITE: goodreid.com