Greg Newman, senior wealth advisor and portfolio manager at Newman Group ScotiaMcLeod
Focus: North American dividend stocks and protection strategies

MARKET OUTLOOK

The Federal Reserve and governments across the world have held a disaster from unfolding in the capital markets. Soon, there will be a partial re-opening of many economies.

We believe there are four types of companies for investors to consider here. The first are those that stand to benefit from the new reality, such as companies that help us work from home and connect. The second are those that are largely not impacted (utility companies for an example), where as long as government money flows the lights can stay on. Third are those companies that will be challenged for some time but will ultimately survive, such as insurance companies that now have lower yields to rely on for more time to finance future liabilities. The fourth group are those in the eye of the storm that you do not want to own at this time. Cruise ships will fall into this last camp.  

Depending upon the price, you can buy the first three with a preference for the first two. Opportunities will unfold to buy the fourth group, but probably not for a while and at this point the risk is not worth the reward for equity investors.

In the meantime, I believe that if policy makers can pull this one off and combine with lower-for-longer rates and endless stimulus, the market multiple for the winners can go far higher than the market is currently anticipating

UPDATE

I sold a percentage of Alphabet (GOOG), Apple (AAPL) and Brookfield Infrastructure (BIP-U) in the second half of February 2020. When the Federal Reserve arrested the domino in the second half of March, I started buying them again.

TOP PICKS

BMO NASDAQ 100 HEDGED TO CAD INDEX ETF (ZQQ TSX)

ZQQ enables investors to own what we believe are some of the most attractive companies anywhere.  Many of these companies are well positioned for the changing world upon us.  Own this basket while it is still at a reasonable price.

TELUS (T TSX)

Telus enables investors to play defence, with steady revenue streams and enviable dividend, as well as offence, with the Telus International spinout optionality, Telus Health and the company becoming an eventual beneficiary of 5G.

CONSTELLATION SOFTWARE (CSU TSX)

Constellation offers investors solid free cash flow, 69 per cent recurring revenue, a pristine balance sheet and solid growth prospects at an attractive multiple.

PAST PICKS: MAY 2, 2019

ALPHABET (GOOG NASD)

• Then: $1162.61
• Now: $1246.18
• Return: 7%
• Total return: 7%

APPLE (AAPL NASD)

• Then: $209.15
• Now: $281.56
• Return: 35%
• Total return: 36%

BROOKFIELD INFRASTRUCTURE (BIP-U TSX)

Brookfield Infrastructure Corp (BIPC NYSE) spun off March 31.

• Then: $55.30
• Now: $54.43
• Return: 8%
• Total return: 13%

Total return average: 25%