Lorne Steinberg, president of Lorne Steinberg Wealth Management

Focus: Global value stocks and high-yield bonds

MARKET OUTLOOK

Investors are navigating uncharted waters. A decade after the financial crisis, central banks remain worried about deflation and bond yields continue to fall. Interest rates are near-zero in North America, and are actually negative in Japan and most of Europe. At the same time, global growth is slowing, corporate earnings are weak and asset valuations are far from cheap. 

In this market, value is the key to success. To take advantage of ongoing volatility, investors should be focused on owning companies that are still trading at attractive prices, offer sustainable dividend growth and hold a healthy cash component.

TOP PICKS

Lorne Steinberg's Top Picks

Lorne Steinberg shares his top picks: Morgan Stanley, Shell and Hosiden.

Morgan Stanley (MS.N)

Bank shares have been weak due to low interest rates and the flat yield curve.  However, Morgan Stanley is the largest wealth management firm in the U.S. and has less exposure to interest rates than many of its peers. The shares are trading at a P/E of nine, and offer a 3.4 per cent dividend.  At the current price, the shares offer compelling value in an expensive market.

Royal Dutch Shell (RDSb.N)

Royal Dutch Shell has had an outstanding track record of growing its diversified energy businesses while maintaining strong free cash flow and paying healthy dividends. The recent pullback in the share price offers a good entry point, with a dividend yield of 6.5 per cent and a P/E of 12.

Hosiden (6804 TYO)

Hosiden is a diversified manufacturer of electronic and telecommunications equipment. It has been consistently profitable, with strong free cash flow and rising dividends. The Japanese stock market is on sale and Hosiden represents outstanding value, as the working capital is greater than the share price, so investors are essentially getting the company for free. The dividend is 2.4 per cent and the company has been buying back shares — an excellent use of capital that will benefit shareholders.
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
MS Y Y Y
RDSb Y Y Y
6804 Y Y Y


PAST PICKS: AUG. 1, 2018

Lorne Steinberg's Past Picks

Lorne Steinberg reviews his past picks: HP Inc, ING Group and Camellia PLC.

HP Inc. (HPQ.N)

  • Then: $23.01
  • Now: $18.78
  • Return: -18%
  • Total Return: -16%

ING Groep (ING.N)

  • Then: $15.15
  • Now: $9.27
  • Return: -39%
  • Total Return: -33%

Camellia PLC (CAM LON)

  • Then: £11650.00
  • Now: £9800.00
  • Return: -16%
  • Total Return: -15%

Total Return Average: -21%
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
HPQ Y Y Y
ING Y Y Y
CAM Y Y Y


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