Barry Schwartz, CIO and executive vice president, Baskin Wealth Management
FOCUS: North American large caps
Top Picks: Meta, Copart, Live Nation
MARKET OUTLOOK:
The last five years have delivered extraordinary returns for U.S. stock markets. We believe that investors need to have more normalized expectations for market returns going forward for the following reasons. First, the economy in North America is decelerating in the face of significant uncertainty. Second, valuations are at high levels so returns from here will have to come from earnings growth, not multiple expansion. Finally, many of the winners over the past five to ten years have multi-hundred billion-to-trillion-dollar market caps. It seems unlikely that they will deliver the type of growth they had in the past. That said, we are very bullish on our portfolio and believe that most of the companies we own will deliver double-digit earnings growth over the next few years. This should protect us against multiple compression. We are big believers in the AI theme and feel it will unlock significant productivity for businesses and consumers. We feel the best way to take advantage of this theme is to own the companies that already have distribution with millions/billions of customers.
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TOP PICKS:
META (META NASD)
As the operator of Facebook, Instagram, and WhatsApp, Meta has a large opportunity to invest in AI to drive engagement and advertising revenues throughout all its apps. Shares remain attractively priced at a similar multiple to the S&P 500 Index.
COPART (CPRT NASD)
Copart’s auto auction business continues to grow at a fast pace. We expect the company to deliver double-digit earnings growth as it expands its business into heavy equipment and auto auctions in Europe. The company has close to $4 billion net in cash and continues to reinvest for future growth.
LIVE NATION ENTERTAINMENT (LYV NYSE)
Live Nation’s stock has retreated from all-time highs as worries about the anti-trust lawsuit against it looms. Live’s business is firing on all cylinders and 2025 is shaping up to be a busy year for concerts and festivals. Live Nation has been extremely active acquiring and building its own venues to control its destiny.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| META | Y | Y | Y |
| CPRT | Y | N | Y |
| LYV | Y | Y | Y |
PAST PICKS: January 3, 2024
Topicus.com (TOI CVE)
- Then: $93.00
- Now: $143.37
- Return: 54%
- Total Return: 57%
Brookfield Corporation (BN TSX)
- Then: $51.02
- Now: $84.19
- Return: 65%
- Total Return: 66%
TFI International (TFII TSX)
- Then: $175.80
- Now: $129.72
- Return: -26%
- Total Return: -25%
Total Return Average: 33%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| TOI | Y | N | Y |
| BN | Y | Y | Y |
| TFII | Y | Y | Y |
