Jennifer Radman's Top Picks
Jennifer Radman, head of investments and senior portfolio manager at Caldwell Investment Management
FOCUS: North American large cap stocks
The market has seen a significant shift in investor sentiment with early recovery cyclicals leading markets higher. As it became apparent that second quarter earnings would mark an earnings bottom, giving the market a sense of what ‘worst-case’ earnings looked like, risk taking shifted from valuation risk (i.e. paying high multiples for earnings growth and stability) to earnings risk, where investors became comfortable buying more cyclical earnings streams. This shift accelerated in early November on vaccine news and has continued into 2021 as investors anticipate a surge in economic activity as pent-up demand is unlocked.
Magna provided a strong multi-year earnings outlook where revenue would out-pace vehicle growth and margins would exceed prior cycle peaks. The company is well positioned for secular trends within auto and the valuation remains un-demanding.
Stelco is set to have a very strong 2021 on the back of strong steel prices and higher volume. It has an attractive low cost position, reinstated its dividend, and management is well-aligned to increase shareholder value through its 15 per cent equity ownership.
Converge is a consultant and value-added reseller of IT solutions with a focus on mid-market customers. There is still a long runway of growth opportunity as mid-market companies shift to the cloud and Converge complements this organic growth with an acquisition strategy.
PAST PICKS: January 9, 2020
CGI Inc. (GIB/A TSX)
- Then: $112.72
- Now: $95.82
- Return: -15%
- Total Return: -15%
Motorola Solutions (MSI NYSE)
- Then: $168.69
- Now: $181.64
- Return: +8%
- Total Return: +10%
The Middleby Corporation (MIDD NASD)
- Then: $109.58
- Now: $133.49
- Return: +22%
- Total Return: +22%
Total Return Average: +6%
Company Twitter Handle: @Caldwell_Funds
Company Website: https://caldwellinvestment.com/