Paul Harris, partner and portfolio manager at Harris Douglas Asset Management

Focus: North American and global stocks

MARKET OUTLOOK:

The problem with COVID is that it is everywhere until it is nowhere. COVID will keep us in some kind of restricted economy for several more months and will continue to add to a sew saw in economic data which will amplify investor anxiety.

A stronger economy and rising inflation prospects as well as an earnings recovery would make it difficult to justify negative real rates and the current positioning of many of the major central banks. Even so, such an outcome does not necessarily imply an end to the economic recovery or to longer-term bull run, but it could mean that returns are more muted in the near term.

One thing we do know is that great companies will persist. If you owned a mediocre business heading into this pandemic, it is unlikely that the company will be a better business after COVID-19. We continue to believe that technology, healthcare and healthcare technology, consumer staples and discretionary- Amazon Costco and Walmart will continue to do well.

TOP PICKS:

EssilorLuxottica ADR (ESLOY OTC)

EssilorLuxottica is a global leader in design, manufacture, and distribution of ophthalmic lenses, frames, and sunglasses. Essilor is a market leader across the entire value chain in eyewear. The global eyewear market offers attractive long-term resilient growth, especially after the last months of the pandemic when screen use has gone up exponentially. We see the GrandVision acquisition as transformational and Essilor will be a winner in the digital transformation of eye wear. The stock has a dividend yield of 1.6 per cent, has a strong balance sheet and accelerating free cash flow growth.

Checkpoint Software (CHKP NASD)

Checkpoint Software is an Israeli software company that trades in New York. Checkpoint specialize in security, especially cyber security. The company trades at 18.8x earnings, has no debt and free cash flow growth. Cybersecurity is a growing area especially as we have become more digitized over the last year and cyber-attacks at the corporate and government have become more common.

Facebook (FB NASD)

Facebook has more than 3.0 billion users and still growing user base. The large amount of data collected from this user base is a unique and valuable asset for ad and content targeting. Facebook has may growth levers with WhatsApp and Instagram. The company has high margins with EBITDA margins in the mid 50 per cent, trades at 24 times earnings, and is projected to generate $25 billion in free cash this year.

PAST PICKS: July 21, 2020

Stryker Corporation (SYK NYSE)

• Then: $190.68
• Now: $257.89
• Return:  35%
• Total Return: 37%

Amadeus IT Group ADR (AMADY OTC)

• Then: $54.68
• Now: $66.57
• Return:  22%
• Total Return: 22%

FirstService Corp. (FSV TSX)

• Then: $139.75
• Now: $230.02
• Return: 65%
• Total Return: 65%

Total Return Average: 41%