Paul Harris, partner and portfolio manager at Avenue Investment Management

Focus: North American and global equities
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MARKET OUTLOOK
The stock market continues to make new highs. Just a year ago, the world economy seemed trapped in a cycle of low growth and inflation. Markets recoiled at the possibility that the Federal Reserve would raise rates. Now interest rates and inflation forecast have risen and the market is shrugging off the possibilities of Fed rate increases. Much of the optimism in the market is driven by expectations of corporate tax cuts and deregulation. However, there are also some real improvements in the global economic data. For example, the ISM index is expanding and we have seen positive readings in retail sales, industrial production, the job market, consumer confidence and small business confidence. Although we may see a pullback in the stock market, the positive economic outlook should help stocks in the long run.

TOP PICKS

BAYERISCHE MOTOREN WERKE AG (BMWYY.PK) manufactures and sells luxury cars and motorcycles worldwide. With quantitative easing in Europe we think that, not unlike the U.S. consumer, the company will front-load purchases, especially autos (European auto sales are still below 2007 levels). The shares trade at 7.5 times 2017 earnings and has a 4.20 per cent dividend yield.

BLACKSTONE GROUP (BX.N) is a private equity firm. The stock trades at 10.5 times earnings and has a five per cent dividend yield. We believe that this is a great environment for private equity firms at they can harvest many of the investments they have made over the last several years. They raised $100 billion, which can be used if the market does poorly.

AUTOCANADA (ACQ.TO) is an auto dealership company. The company offers a diversified range of products from sales, services and financing. The stock trades at 12 times earnings, has a dividend yield of 2.0 per cent and has free cash flow of $50 million per year.
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
BMW Y Y Y
BX Y Y Y
ACQ Y Y Y


PAST PICKS: MARCH 24, 2016

KRAFT HEINZ (KHC.N)

  • Then: $76.46
  • Now: $90.90
  • Return: +18.89%
  • TR: +22.19%

FIRSTSERVICE CORP (FSV.TO)

  • Then: $53.25
  • Now: $74.28
  • Return: +39.49%
  • TR: +40.87%

BAYERISCHE MOTOREN WERKE AG (BMWYY.PK)

  • Then: €79.58
  • Now: €86.65
  • Return: +8.88%
  • TR: +13.61%

TOTAL RETURN AVERAGE: +25.55%
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
KHC Y Y Y
FSV Y Y Y
BMW Y Y Y


WEBSITE: www.avenueinvestment.com