Jim Huang, president of T.I.P. Wealth Manager
Focus: North American equities

_______________________________________________________________

MARKET OUTLOOK

It was good while it lasted: the ever-lower march towards lower market volatility has ended. So far, 2018 has witnessed notable market swings not seen in the last few years, yet their magnitude still pales in comparison to pre-QE (quantitative easing) days. As the U.S. Federal Reserve continues on its path of gradual hiking of benchmark interest rates, the punch bowl is not quite as full as before. A few presidential tweets here and there, plus the ominous sounding “trade war” overhanging and it’s no wonder that investors are thinking twice about this long-running bull market. Having said this, the momentum of the current global economic recovery remains largely intact, corporate earnings continue to climb and global central banks are still adding liquidity. Recent corrections have returned valuations to more acceptable levels. It all adds up to more sunny days ahead, although some serious storm clouds may well linger.

TOP PICKS

DIRTT ENVIRONMENTAL (DRT.TO)
Last bought on March 2018 at $4.46.

DIRTT means “Do It Right This Time.” It’s the second coming of Mogens Smed of SMED fame. It designs, manufactures and installs modular interiors in a way that poises to revolutionize the construction industry. A proprietary and highly configurable 3D design system, integrated manufacturing and global distribution partnerships are just some of the differentiating factors of DIRTT.

Lately, it’s suffered from some management turnovers and business fluctuations and its stock has dropped. With activist investors now on the scene and continual strong fundamentals, DIRTT is set for a strong recovery.

CANADIAN NATURAL RESOURCES (CNQ.TO)
Last bought on December 2017 at $44.18.

Canadian Natural is one of the premier North American oil and gas producers which in recent years has focused on growing its oil sand production. With much of upfront capital investments already spent, it enjoys tremendous free cash flow in the current oil price environment. With a strong balance sheet and prudent cash flow management, the company can weather potential storms in the oil market and take advantage of oil price upsides in a strong global economy. As a bonus, Canadian Natural has been steadily increasing its dividends and is now at 3.6 per cent.

LAURENTIAN BANK (LB.TO)
Last bought on March 2018 at $48.30.

Historically known as boring and inefficient, Laurentian Bank has undergone a transformation in recent years. It’s drastically restructuring its branch network in Quebec, increasing cost efficiencies, while expanding outside the province in advisor financing and alternative mortgage.

Rapid growth has caused some issues with internal systems, forcing the bank to buy back some mortgages it had sold and triggering a loss of confidence and a sagging share price. Yet Laurentian remain confident that the problems are contained and the underlying mortgages are sound. The moment of truth should come in the next quarter or two. Meanwhile, Laurentian is one of last value plays in the Canadian banking space, trading at single-digit price-to-earnings (P/E) and below book value. The 5.3 per cent dividend yield means you are paid to wait.

PAST PICKS: MARCH 20, 2017

DIRTT ENVIRONMENTAL (DRT.TO)

• Then: $6.70
• Now: $4.58
• Return: -31.64%
• Total return: -31.64%

INTERTAPE POLYMER (ITP.TO)

• Then: $21.94
• Now: $20.52
• Return: -6.47%
• Total return: -3.27%

PAREX RESOURCES (PXT.TO)

• Then: $15.83
• Now: $18.40
• Return: 16.23%
• Total return: 16.23%

Total return average: -6.22%

WEBSITE: www.tipvest.com