Gordon Reid, President & CEO, Goodreid Investment Counsel
Focus: U.S. equities
Top Picks: GATX Corp., General Motors, McKesson
MARKET OUTLOOK:
The narrative of the market has been focused on geopolitics and its effects on energy markets. As an extension, markets have been worried about inflation and economic growth. The fact that the equity market has bounced to new record highs, spawned by expectations (hope) that the Iran war would soon be behind us is an illustration of the market’s perception that the war and global energy disruption is a short-term event. On the other side of this are issues that the market wants to focus on, for example how well are corporate profits progressing, the state of the economy in a normalized setting, and what is a neutral level for interest rates.
Artificial intelligence (AI) has reclaimed its spot as front-page news. The issues of an adequate return on the hundreds of billions of dollars invested is beginning to be answered as we witness the beginning of a new upward leg of productivity improvements, as well as both corporate profits as a percentage of gross domestic product (GDP) and gross margins hitting record levels. While AI disruption brings some levels of risk, it is also an investor’s dream.
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TOP PICKS:
GATX Corp. (GATX NYSE)
GATX a railcar leasing company. In January they completed a transformational deal with Wells Fargo acquiring over a hundred thousand railcars for US$4.2 billion. GATX partnered with Brookfield Infrastructure Partners in a joint venture, which will be immediately accretive and offers financial promise over time. At 18 times earnings per share (EPS) and sporting a 12 per cent return on equity (ROE) this is a quality addition to the Goodreid Small Cap portfolio.
General Motors (GM NYSE)
GM is no longer in the crosshairs of the Trump administration, who have moved on to other hotspots.
Nevertheless, GM is left with a tariff issue that remains a headwind, albeit one that they are managing effectively and offers future benefit should a new administration reverse course. Good management, including with their electric vehicle (EV) platform should yield earnings in the US$12 per share range, resulting in a price–earnings ratio of under seven times.
McKesson (MCK NYSE)
McKesson’s earnings predictability and reasonable valuation make it a stable and productive component of any portfolio. Double digit percentage annual growth in revenues, cash flow and earnings more than support a price–earnings ratio multiple that is undemanding. Growth in scripts are being fueled by GLP-1 drugs and the aging demographic profile in America. Finally, as a domestically focused company they avoid the unpredictability of a strong dollar.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| GATX NYSE | N | Y | Y |
| GM NYSE | Y | N | Y |
| MCK NYSE | Y | N | Y |
PAST PICKS: APRIL 9, 2025
Freeport-McMoRan (FCX NYSE)
Then: US$33.74
Now: US$61.71
Return: 83%
Total Return: 85%
Meta (META NASDAQ)
Then: US$585.77
Now: US$662.28
Return: 13%
Total Return: 13%
Morgan Stanley (MS NYSE)
Then: US$111.70
Now: US$189.47
Return: 70%
Total Return: 73%
Total Return Average: 57%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| FCX NYSE | Y | N | Y |
| META NASDAQ | Y | N | Y |
| MS NYSE | Y | N | Y |
