Gordon Reid, President & CEO, Goodreid Investment Counsel
Focus: U.S. equities
Top picks: Amazon.com, Citigroup, Wesco
MARKET OUTLOOK:
As expected, the U.S Federal Reserve has cut interest rates, but more important, perhaps, were the dovish statements and tones surrounding the meeting.
The market rewards lower rates but sometimes discipline and a long-term view may be safer and more constructive.
It is well known that U.S. President Donald Trump is a real estate investor and transactional in nature. As a politician, he is motivated to be a short-term thinker.
The bond market will have its say. While the U.S Federal Reserve’s action controls the short end of the yield curve, the long end of the yield curve is bond market territory.
The likely result will be a steeper yield curve, very positive for banks. For this reason, Goodreid is overweight money centre banks.
Watch for reports on the labour market. A continued weakening of the jobs market may temporarily slow the dovish narrative from the U.S Federal Reserve. The other mandate that the Fed has, is inflation, which is at risk of moving higher as rates fall.
Interesting times!
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TOP PICKS:
Amazon.com (AMZN NASD)
Amazon is performing well on multiple fronts. Its retail business (e-commerce) has grown into the larger footprint it created post pandemic and is paying dividends.
Amazon Web Services (AWS) is also on a roll as its dominance in cloud services has regained its footing.
Add to that the buzz around artificial intelligence, and you have an issue that is on the cusp of major earnings gains.
At 28 times its projected 2026 earnings per share, this issue is a buy.
Citigroup (C NYSE)
Citigroup’s stock price has had a resurgence.
The argument for the past number of years has been it’s “cheap for a reason”. However, under CEO Jane Fraser’s leadership, this large money centre bank has turned things around.
They have pared their foreign exposure and improved their financial metrics, leading to an expectation of rapidly improving earnings. The extreme undervaluation gap has narrowed but at only a slight premium to tangible book value. This issue will likely continue to outperform.
Wesco (WCC NYSE)
Wesco is a distributor of electrical, industrial and communication products. Once a staid industry, it is now a lynchpin in data centre development and at the centre of tariff disruptions.
All in all, at less than 20 times earnings and mid teens annual percentage growth of earnings ahead, we are excited.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| AMZN NASD | Y | N | Y |
| C NYSE | Y | N | Y |
| WCC NYSE | N | Y | Y |
PAST PICKS: DEC 17, 2024
Booking Holdings (BKNG NASD)
Then: US$5154.96
Now: US$5475.79
Return: 6%
Total Return: 7%
McKesson (MCK NYSE)
Then: US$562.78
Now: US$814.46
Return: 45%
Total Return: 45%
Uber (UBER NYSE)
Then: US$61.03
Now: US$80.45
Return: 32%
Total Return: 32%
Total Return Average: 28%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| BKNG NASD | Y | N | Y |
| MCK NYSE | Y | N | Y |
| UBER NYSE | Y | N | Y |
