Jeff Parent, chief investment officer at Castlemoore Inc.
Focus: Technical analysis

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MARKET OUTLOOK

The TSX Composite and Dow Jones Industrial Averages are consolidating around the midpoint of the year’s high and low levels. Technically, this phase translates to the markets being at a decision point. Until we break through a new high or low for the year, it isn't possible to conclude we're in a 2015-style market, or a new phase of the bull run. 

The drivers in the U.S. will continue to be the large-cap tech names like Amazon, Apple, Google and Microsoft. After seeing 50 per cent plus gains last year, new buyers in these names must be convinced the momentum can continue. The runs in these stocks are extended, which suggests a pullback is likely or, at the very least, that they’ll see higher-than-average volatility. 

In Canada, energy names will continue to hold back the index as they have for the past ten years, but could provide short-term trading opportunities. With the lack of large-cap growth names in Canada, the banks must lead the way. At the moment, the best bets may be in the overlooked and oversold value-income names.

TOP PICKS

Jeff Parent's Top Picks

Jeff Parent, chief investment officer at Castlemoore Inc., shares his top picks: HCP, Rayonier and Canada Goose.

HCP INC (HCP.N)

HCP is a large, diversified healthcare REIT. Trading at multi-year lows, this presents an opportunity to pick up a good yielding position at a value price. There is still risk due to the rising yield curve, so be prepared to exit below $21.50.

RAYONIER (RYN.N)

This stock has begun steadily climbing in November last year after a one-year consolidation. We expect the earnings momentum to continue with a corresponding price increases. Begin reducing below $33 and exit at $31.

CANADA GOOSE HOLDINGS (GOOS.TO)

Fundamentally, this looks good from many aspects. The price hasn’t broken out of its consolidation yet, but it's been steady. On an upside move, the potential to move above $47 is good. Reduce below $39.50 and exit at $36.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
HCP N N N
RYN N N N
GOOS N N N

 

FUND PROFILE

CastleMoore Canadian Equity Fund
Performance as of: Dec. 31, 2017

  • 3 Month: 4.21% fund, 3.67% index
  • Annual ROR (2012): 8.32% fund, 5.89% index
  • Average drawdown: -4.12% fund, -8.27% index
  • Average recovery (mths): 6.9 fund, 15.7 index

* Index: TSX Composite
* Net of Fees

TOP 5 HOLDINGS AND WEIGHTINGS

  1. The Stars Group Inc: 7.2%
  2. AGF Management Ltd: 7.2%
  3. Suncor Energy Inc: 6.8%     
  4. Open Text Corp: 6.6%
  5. Industrial Alliance Ins & FinServ Inc: 6.4%

WEBSITE: http://www.castlemoore.com/