Matt McCall, president of Penn Financial Group

Focus: U.S. equities
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MARKET OUTLOOK
I have been bullish for years, as you probably know from past appearances, and I continue to remain positive on both U.S. and global stocks for the foreseeable future. My focus has been on sectors and companies that play into a long-term trend: What I refer to as NexGen Investing. This includes everything from the Internet of Things to investing self-driving cars and lithium.

Technically, all major indices are strong. Fundamentally, the S&P 500 is above the average P/E ratio, but it is nowhere near bubble levels, which will be reached before the end of this great bull market. Earnings continue to surprise to the upside because the U.S. economy being stuck in a two-to-2.5-per-cent growth mode is great for corporation’s bottom lines. For months, the stock market rallied on the three pillars of the Trump plan: lower taxes, less regulation, and huge spending on infrastructure. While all three may still happen, the stock market continues to move higher as the doubts arise. This is because as the world was focused on the U.S., Europe, Latin America, and the emerging markets have quietly been starting to turn things around. With the entire globally economy in a sweet spot and valuations acceptable, stocks around the world should continue higher into 2018.

TOP PICKS

STMICROELECTRONICS (STM.N) – Recent recommendation: $16.41 on May 26, 2017
The company is a European semiconductor manufacturer that sells its chips all over the world to various industries. I like it because it has exposure to the booming self-driving car trend as the new vehicles require a large number of semiconductors and sensors. The stock is growing the bottom line from $0.29/share in earnings last year to nearly $1/share by 2018. And the chart is also flashing a buy signal.

TELADOC (TDOC.N) – Recent recommendation: $24.85 on May 3, 2017
The future of medicine is not taking a day off work to spend hours in the doctor’s office waiting to be told you have a cold and need antibiotics. Teladoc is a leader in telehealth and is the NexGen of medicine. The company has over 17.5 million members that can be in contact with some 3,000 board-certified doctors 24/7 in as little as 10 minutes. Its latest earnings release was blockbuster with revenues up nearly 60 per cent and total visits up over 60 per cent. The company should be profitable by 2019 with EPS over $2 by 2021.

SOCIEDAD QUÍMICA Y MINERA DE CHILE S.A. (CHEMICAL MINING COMPANY OF CHILE) (SQM.N) – Recent recommendation: $34.50 on May 3, 2017
This is a play on one of my favourite trends: Electric vehicles. The amount of lithium needed to power the soon-to-be explosion of electric vehicles is well above the current supply. This bodes well for the three big lithium producers, of which SQM is one. The company makes up 22 per cent of global lithium production. Last quarter, the company reported an 82 per cent increase in earnings and a 35 per cent increase in revenue. When broken down, revenue for the lithium division was up 181 per cent!
 

PAST PICKS: JUNE 1, 2016

GW PHARMACEUTICALS (GWPH.O) – Still hold. This company has several Phase 3 trials that should have results from the FDA in the coming months. If one of them is approved, it will send the stock up big.

• Then: $92.17
• Now: $98.50
• Return: +6.86%
• TR: +6.86%

TAL EDUCATION GROUP (TAL.N) – Sold, but own a competitor. Love the sector.

• Then: $54.77
• Now: $126.90
• Return: +131.66%
• TR: +132.60%

PLY GEM HOLDINGS (PGEM.N) – Also sold and took a gain. It is once again looking good.

• Then: $15.08
• Now: $16.80
• Return: +11.40%
• TR: +11.40%

TOTAL RETURN AVERAGE: +50.28%