Peter Imhof's Top Picks: Jan. 31, 2020

Peter Imhof, vice-president and portfolio manager at AGF Investments
Focus: Canadian stocks

MARKET OUTLOOK

I am presently cautious on the overall market, but do believe the current turmoil is presenting investors with some good opportunities in certain sectors and more on a stock-specific basis. We have seen some exaggerated movements as the coronavirus affects stocks in the near term. If you look at historic patterns, these scares have presented buying opportunities for investors that have a longer-term time horizon. Investors should pick their spots and accumulate names that have demonstrated the ability to grow their earnings despite a negative macro environment.

TOP PICKS

K92 MINING (KNT TSXV)
Most recently bought this week at $3.60.

K92 is a rapidly growing gold producer that continues to under-promise and over-deliver. It recently reported a record quarter of production that beat all estimates in terms of production as well as grade. The company has guided to production growth for 2020 of between 35 and 45 per cent. K92 has been mining the third-highest-grade gold mine over the past 12 months, only behind the extremely high-grade mines of Kirkland Lake. Investors should expect to see more drill results in the near future as well as a new resource within the next couple of months. 

ELEMENT FLEET FINANCIAL (EFN TSX)
Most recent purchase at $12.20.

Element’s business is to manage vehicle fleets for corporations. The company has been putting up strong earnings growth over the past number of quarters and continues to win new business. Management changes over the past couple of years have done wonders for getting investors back on board with the company. I see strong visibility in their earnings growth relative to the valuation it trades at.

PAREX RESOURCES (PXT TSX)
Added to the position at $23.
Parex Resources is the premier oil producer in Colombia. Management has done a great job of growing per-share production growth. The stock has come off approximately 15 per cent since the onset of the coronavirus, but continues to deliver excellent results. The company is a long-term compounder despite the fact that they have been facing headwinds of a negative oil market for the past few years. If we do see a bounce in oil prices, we should see a strong rebound in their stock.

PAST PICKS: JANUARY 23, 2019

WPT INDUSTRIAL REIT (WIR/U TSX)

• Then: $13.23
• Now: $14.30
• Return: 8%
• Total return: 15%

TAMARACK VALLEY (TVE TSX)

• Then: $2.07
• Now: $1.70
• Return: -18%
• Total return: -18%

KRAKEN ROBOTICS (PNG TSXV)

• Then: $0.52
• Now: $0.57
• Return: 10%
• Total return: 10%

Total return average: 2%

WEBSITE: agf.com