David Driscoll, Founder, President & CEO, Liberty International Investment Management Inc.
Focus: Global Equities
Top picks: Cameco, HDFC Bank, Lifco AB
MARKET OUTLOOK:
The current stock market selloff that began last week is in full force.
The biggest points of worry are rising unemployment, tariff-induced inflation and overvalued markets. As a backdrop, the S&P 500 Index (SPX) currently trades at 24.6 times earnings with a dividend yield of 1.19 per cent.
Year-to-date, it’s up 11.9 per cent in USD. Compare that to the Emerging Markets Index (MXEF) which trades at 15.5 times earnings with a dividend yield of 2.34 per cent that is up 26.3 per cent year-to-date. Foreign investors may buy U.S. tech stocks but the rest of the capital allocation has gone elsewhere in the world.
On a technical basis, the S&P 500 has been in an overbought situation since May so it’s not surprising that we’re getting a correction to cool the jets of the momentum investors. The 50-day moving average was breached last week and the next support level for the 100-day moving average was hit yesterday at 6544. The next step down is the 200-day moving average which is currently at 6160. From the market peak at 6920, this implies an 11 per cent correction or more.
What keeps investors in the game is to have a fully-diversified global portfolio of stocks and bonds that spreads the risk around by investing in different industries, size of companies, countries and currencies. The risk reduction by this diversification means you probably won’t make 30 per cent in a year, but you shouldn’t lose 30 per cent in a year, either. This keeps an investor in the game by avoiding the big loss caused by over-concentration or correlation of assets.
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TOP PICKS:
Cameco (CCO TSX)
Cameco explores, develops, mines, refines, converts and fabricates uranium. The company offers uranium for sale as fuel for generating electricity in nuclear power reactors. It also has significant investments across the nuclear fuel cycle, including an ownership interest in Westinghouse Electric Company, the maker of nuclear power plants.
The reason to own it long-term is for two reasons: Electricity demand is straining current grids and nuclear appears to be the only way to appease rising demand from data centres. If the White House politicizes the Federal Reserve and forces U.S. interest rates to 1 per cent, this should cause a drop in the U.S. dollar and push commodity prices higher (commodities are priced in U.S. dollars). This, in turn, could cause a new bull markets in commodities and Cameco would be at the centre of the bull run.
HDFC Bank (HDB NYSE)
The company is India’s largest private sector bank by balance sheet size. It serves more than 68 million customers worldwide and provides a variety of wholesale, retail, and depository financial services. The average age of Indian residents is 30, much lower than aging populations of China, Japan, North America and Europe, leaving the country with the opportunity to grow its economy at a much faster rate than older countries. Infrastructure building will be a necessity for India in the future and if, successful, HDFC will be in the middle of it.
LIFCO AB (LIFCOB SS)
Lifco is a Swedish Krona and trades on the Stockholm exchange. It provides dental products, machinery and tools, sawmill equipment, contract manufacturing, vehicle interiors and environmental technology. It is known as a “serial acquirer”, a company that can grow organically 3 per cent a year and add another four per cent of revenue growth through acquisitions.
They like to buy “Mom & Pop” companies, firms whose owners built their companies over decades but who are looking to sell the business to fund their retirements. By purchasing privately, Lifco can pay much lower prices than to buy a publicly-listed company, bring the company into the fold, and enjoy the growing revenues, rising margins and higher profits.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| CCO TSX | Y | Y | Y |
| HDB NYSE | Y | Y | Y |
| LIFCOB SS | Y | Y | Y |
PAST PICKS: MAY 14, 2025
Alfa Laval AB (ALFA SS)
Then: 413.20 KR
Now: 430.60 KR
Return: 4%
Total Return: 4%
Comfort Systems (FIX NYSE)
Then: US$467.51
Now: US$852.66
Return: 82%
Total Return: 83%
Intertek Group PLC (ITRK LN)
Then: £4938.00
Now: £4840.00
Return: -2%
Total Return: 1%
Total Return Average: 29%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| ALFA SS | Y | Y | Y |
| FIX NYSE | Y | Y | Y |
| ITRK LN | Y | Y | Y |
