Jamie Murray, portfolio manager and head of research Murray Wealth Group
Focus: North American equities

MARKET OUTLOOK

Following the banner year in 2019, we continue to view current conditions as healthy for equity investments, though returns will likely be more moderate. The U.S. economy continues to perform well, with housing and technology providing outstanding job creation. Central banks around the world are also providing the stimulus necessary for further equity gains as the Fed stabilizes the repo market and interest rates remain negative in Europe. The coronavirus and U.S. presidential election present risks to market sentiment and we would be selectively purchasing companies with strong growth outlooks on any weakness.

TOP PICKS

Jamie Murray's Top Picks

Jamie Murray, portfolio manager and head of research at Murray Wealth Group, discusses his top picks: Broadcom, Facebook, Pfizer.

BROADCOM (AVGO NASD)

Broadcom is a semiconductor company with a focus on infrastructure computing and mobile technology. The company is making a push into the enterprise software market through the recent acquisitions of CA Technologies and Symantec's Enterprise Security business. Both deals have proved to be accretive to earnings, but the frequent shift in corporate strategy has created an earnings multiple discount despite the company's strong position in its markets. We like the capital allocation strategy and believe the company can continue to earn excess returns on its investments. The company generates a tremendous amount of free cash flow, which should enable annual dividend raises (currently 4 per cent yield).

FACEBOOK (FB NASD)

Facebook has moved past its privacy issues and is now back on the offensive with new commerce, payments and other monetization efforts underway. Revenue and free cash flow is re-accelerating and we believe there is upside in margins going forward. Its cash reserve was US$54 billion at the end of 2019. Facebook's core four apps all continue to rank in the top 5 in terms of downloads, highlighting their structural importance in today's modern society. Similar tech companies with operating and growth statistics trade at multiples that are two or three factors higher than Facebook.

PFIZER (PFE NYSE)

Pfizer is one of the world's largest drug manufacturers. The company is spinning out its slow-growth business Upjohn into a merger with Mylan, creating a higher-growth entity with no major patent expiries for six years. Pfizer has made tremendous progress on improving its R&D division and should be better positioned to manage patents and maintain a healthy organic growth rate. There could be some volatility while investors digest the business transformation, but management will have a clean sheet to start with providing opportunities to beat guidance. The company will host an R&D investor day in March, which could be the first catalyst.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
AVGO Y Y Y
FB Y Y Y
PFE Y Y Y

 

PAST PICKS: FEB. 26, 2019

Jamie Murray's Past Picks

Jamie Murray, portfolio manager and head of research at Murray Wealth Group, discusses his past picks: Artizia, Spin Master, Netflix.

ARITZIA (ATZ TSX)

  • Then: $16.35
  • Now: $25.00
  • Return: 53%
  • Total return: 53%

SPIN MASTER (TOY TSX)

  • Then: $45.01
  • Now: $31.36
  • Return: -30%
  • Total return: -30%

NETFLIX (NFLX NASD)

  • Then: $364.97
  • Now: $375.14
  • Return: 3%
  • Total return: 3%

Total return average: 7%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
ATZ Y Y Y
TOY Y Y Y
NFLX Y Y Y

 

TWITTER: @murray_wealth
PERSONAL TWITTER: @MWG_Jamie
WEBSITE: murraywealthgroup.com