Full episode: Market Call for Wednesday, September 30, 2020
Gordon Reid, president and CEO at Goodreid Investment Counsel
Focus: U.S. stocks
Equity market appreciation has paused somewhat in September as air has been let out of the big cap tech names. A long-awaited rotation to more value-oriented names will occur sooner or later, but at Goodreid we prefer to hedge our bets through the use of a barbell approach. The next six months will provide some clarity within the contentious political environment the health and economic front.
AbbVie (ABBV NYSE)
Latest purchase September 2020 at $90
Earlier this year AbbVie made a bold acquisition, purchasing Allergan in a $63 billion deal. The benefits are numerous, from a reduction in product concentration to huge financial growth projections. Layer on the cost synergies and immediately accretive earnings expectations, and at less than 10 times earnings with a dividend yield of over 5 per cent, this is a very attractive opportunity.
Hexcel (HXL NYSE)
Latest purchase September 2019 at $81.
Hexcel is a structural materials company with about two-thirds of its business coming from commercial aerospace. With the decline in the order books of its major customers, Boeing and Airbus, earnings are currently challenged, but Hexcel represents a huge opportunity as the commercial aerospace business improves.
Mondelez (MDLZ NASD)
Latest purchase September 2020 at $57.
Mondelez International came out of the Kraft Foods reorganization and represents the snack food side. Well-known brands such as Cadbury, Nabisco and Oreos are included in their portfolio. Well managed and risk averse, this stable holding pays a 2.3 per cent dividend, trades at a market multiple and has both top and bottom line growth potential.
PAST PICKS: SEPT. 18, 2019
CVS Health (CVS NYSE)
- Then: $63.26
- Now: $58.42
- Return: -8%
- Total Return: -5%
United Continental (UAL NASD)
- Then: $90.23
- Now: $35.67
- Return: -60%
- Total Return: -60%
United Rentals (URI NYSE)
Total Return: 43%
Total Return Average: -7%