Aug 1, 2018
Lorne Steinberg's Top Picks: Aug. 1, 2018
Lorne Steinberg, president of Lorne Steinberg Wealth Management
Focus: Global value stocks and high-yield bonds
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MARKET OUTLOOK
The strong global economy, led by the U.S., is resulting in rising interest rates as central banks respond to tighter labour markets and a pickup in the inflation rate. Higher rates, the flattening yield curve and a fully valued stock market suggest that the current bull market, which is the second-longest in 70 years, may be coming to an end.
Prudent investors should keep some cash on the sidelines, as the level of risk remains elevated.
TOP PICKS
HP INC (HPQ.N)
HP Inc is the personal systems and printing business that was spun off from Hewlett Packard. Management has done an excellent job, as the company has returned to revenue growth driven by new product launches and increasing market share. The shares are extremely attractive, trading at a price-to-earnings (P/E) of 11, with earnings growing at 10 per cent. The company is using its significant free cash flow for dividend increases and share buybacks, while maintaining its strong balance sheet.
ING GROUP (ING.N)
ING has emerged as one of the best run European retail banks, following the financial crisis. The bank is well capitalized and is delivering solid earnings growth, investing in its core businesses, while paying a 5 per cent dividend. The shares are trading at a compelling valuation with a P/E of 9, and ongoing dividend increases.
CAMELLIA PLC (CAM AIM)
Camellia PLC is a U.K.-based global producer of agricultural products. Through various global subsidiaries, the company is a major producer of tea in India, high-quality edible nuts, avocados, citrus and many other products. The company is extremely well managed and has maintained a very long history of increasing dividends and value creation, while remaining debt-free. In fact, cash accounts for about one-third of the share price, while the shares are trading at a discount to tangible book value.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| HPQ | Y | Y | Y |
| ING | Y | Y | Y |
| CAM | Y | Y | Y |
PAST PICKS: SEPT. 7, 2017
AEGON (AEG.N)
- Then: $5.56
- Now: $6.56
- Return: 18%
- Total return: 21%
SUN LIFE FINANCIAL (SLF.TO)
- Then: $46.36
- Now: $53.46
- Return: 15%
- Total return: 18%
NIPPON ANTENNA (6930 TYO)
- Then: ¥ 595
- Now: ¥ 819
- Return: 38%
- Total return: 42%
Total return average: 27%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| HP | N | N | N |
| ING | N | N | N |
| CAM | N | N | N |
FUND PROFILE
The Steinberg Global Value Equity Fund is a deep value global equity fund focused on investing in companies which trade at a steep discount to their intrinsic value. These companies must meet stringent investment criteria both quantitative and qualitative including financial strength, track record and corporate governance. The fund is well diversified, and risk management criteria includes diversification by industry and geography. With a global value focus, the fund seeks the best values wherever they may be.
Performance as of June 30, 2018
- 1 Month: -0.7% fund, 1.2% index*
- 1 Year: 9.8% fund, 9.6% index
- 3 Year: 8.9% fund, 8.0% index
* Index: 30% S&P/TSX, 20% S&P500, 50% EAFE Value.
* Returns are net of fees.
TOP 5 HOLDINGS AND WEIGHTINGS
- Microsoft: 2.4%
- Morgan Stanley: 2.1%
- Hirano Tecseed: 2.1%
- Philips NV: 2.0%
- Cisco: 2.0%
