Paul Harris, partner and portfolio manager at Harris Douglas Asset Management
Focus: North American and global stocks

MARKET OUTLOOK

Now that the Federal Reserve and the ECB have cut rates and returned to quantitative easing, the normalization of monetary policy seems more distant than a few months ago. The global economy continues to slowdown and virtually no country has escaped this deterioration. While the U.S. still has stronger growth than most developed countries, it continues to worsen just as fast as the global average.

The reasons are plain to see and self-inflicted. The U.S.-China trade war has seen global trade volumes shrink and as a result, we’re seeing a manufacturing and investment drought, capital goods production stalling and global car sales contracting. While the U.S. is less exposed to external troubles than smaller or more open economies, it can’t shield itself completely from the fallout.

Monetary hawks have been up in arms over the loosening of monetary policy by the ECB and the Fed. But the issue may be that policy makers have not gone far enough in staving off an economic downturn.

TOP PICKS

FIRSTSERVICE CORP (FSV:CT)

FirstService recently spun out of Colliers International. The company focuses on residential property management and services (College Pro, California Closets). It has room to grow market share in the U.S. in what remains a very fragmented business. It trades at 28-times next year’s earnings and yields 0.60 per cent.

WALT DISNEY (DIS:UN)

Disney is an American diversified multinational mass media and entertainment conglomerate. The Fox asset purchase along with its new streaming service makes it one of the best competitors to Netflix. Disney’s film library is by far the best in the industry and spans all age groups. From US$60 billion in revenue, 41 per cent comes from parks, 36.5 per cent from media and the remainder is consumer and studio entertainment. Disney will generate US$9 billion in free cash flow this year. The company has high interest coverage and converts 85 per cent of its free cash flow to net income.

ALPHABET (GOOG:UW)

Alphabet is a top search destination on the web and provides a leading search marketing platform for advertisers and merchants. The stock trades at 19.6-times earnings. The company has significant secular growth form internet advertising as well as strong market share in search and other ad segments.

PAST PICKS: FEB. 13, 2019

BANK OF AMERICA (BAC:UN)

• Then: $28.70
• Now: $32.82
• Return: 14%
• Total return: 16%

MICROSOFT (MSFT:UN)

• Then: $106.81
• Now: $144.46
• Return: 35%
• Total return: 37%

CN RAIL (CNR:CT)

• Then: $108.15
• Now: $123.33
• Return: 14%
• Total return: 16%

Total return average: 23%

WEBSITE: harrisdouglas.com