Full episode: Market Call Tonight for Wednesday, September 18, 2019
Gordon Reid, president and CEO of Goodreid Investment Counsel
Focus: U.S. equities
The short-to-intermediate outlook for equities is flashing a caution signal. World economic growth is sluggish, interest rates are historically low and valuations are somewhat elevated. That said, there are identifiable areas of opportunity. The U.S. consumer is in solid shape, a carryover from the 2008-2009 experience. Innovation is driving productivity and damping inflation. Be measured and prudent. Review your financial investments to ensure appropriate asset mix, constructive internal hedges and stock ownership driven by catalysts.
CVS HEALTH (CVS:UN)
Last purchased in August 2019 at $62.
CVS Health is starting to garner some respect after being in the market doghouse for most of the year. The stock trades at an inexpensive nine times earnings and, while earnings growth will be tepid for the next 18 months or so, thereafter management is guiding to a double-digit yearly advance.
UNITED CONTINENTAL (UAL:UW)
Last purchased in September 2019 at $88.
Two counterbalancing influences are in play with U.S. based airlines, including United. On the positive side, the consumer is very strong and air travel is in high demand as illustrated by load statistics such as revenue per seat mile (up 2.5 per cent in Q2). Negative issues such as the grounding of the 737 MAX are having a slight negative effect, and the recent spike in oil prices won’t help either. On balance though, the company is well operated and inexpensive.
UNITED RENTALS (URI:UN)
Last purchased in July 2019 at $128.
United Rentals, as the name implies, is the largest equipment rental company in the world, playing into the infrastructure theme presented by the U.S. administration. Trading at just six times expected 2020 earnings, and growing revenues at a double-digit clip, one has to wonder how inexpensive this issue has to get before catching a bid. Buy and be patient.
PAST PICKS: OCT. 3, 2018
- Then: $72.36
- Now: $70.09
- Return: -3%
- Total return: -0.4%
LEAR CORP (LEA:UN)
- Then: $150.75
- Now: $118.94
- Return: -21%
- Total return: -19%
WASTE MANAGEMENT (WM:UN)
- Then: $89.51
- Now: $114.33
- Return: 28%
- Total return: 30%
Total return average: 4%
Goodreid’s North American Balanced Fund
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: June 30, 2019
- 1 year: 3.0% fund, 3.3% index
- 3 years: 8.7% fund, 5.8% index
- 5 years: 6.3% fund, 4.2% index
INDEX: Equity Balanced Category Average.
Returns are based on reinvested dividends, net of fees and annualized.
- U.S. equities: 37%
- Canadian equities: 32%
- Canadian fixed income: 19%
- Cash: 12%