Rob Lauzon, deputy chief investment officer at Middlefield Capital Corporation
Focus: Global stocks


MARKET OUTLOOK

We remain bullish on equities given loose monetary policy and supportive seasonality. Even so, we acknowledge that investors have largely priced in both phase 1 of the trade deal and improving economic growth going forward. Although the market is no longer cheap, we continue to find select opportunities.

In terms of strategy, we continue to favor a barbell approach, with secular growth on one end and defensive real assets on the other. The former group consists of stocks benefitting from the shift to streaming, while the latter includes companies with concessions assets.

Looking forward, we’re expecting global activity to improve as trade negotiations continue, lifting earnings and supporting stocks. As a result, we see further gains from equities in 2020.

TOP PICKS

WPT INDUSTRIAL REIT (WIR/U:CT)
Bought recently in November at $13.90.

WPT Industrial REIT owns and operates an institutional quality portfolio of industrial properties located in the U.S. We see good visibility on increasing rents, lease terms and occupancy providing earnings and dividend growth for WPT investors. Demand for advanced warehousing and logistics to meet e-commerce secular growth is still in early days. The REIT trades on the TSX in U.S. dollars and yields approximately 5.5 per cent. 

WESTSHORE TERMINALS (WTE:CT)
Bought in recently in November at $22.

Westshore Terminals has the largest coal loading export facilities on the west coast of the Americas. We like “real assets” and this infrastructure asset is trading at an attractive valuation of 8 times EV/EBITDA. We believe the market concern of losing 10 million tonnes from Teck is an overreaction. The company has no debt and free cash flow is set to materially increase. We are hopeful for increased dividends in the future.

CINEPLEX (CGX:CT)
Purchased recently in November at $25.30.

Cineplex has a monopoly position on theatre exhibition in Canada. It’s showing growth in digital media, amusement and leisure segments with Rec Room and esports. It’s got high free cash flow and the dividend is attractive and safe in our opinion at 7 per cent. Tailwind coming as Q4 should be strong with the release of Frozen 2 and Star Wars: Rise of Skywalker. The Scene loyalty program has hidden value.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
WIR/U Y Y Y
WTE Y Y Y
CGX Y Y Y

 

PAST PICKS: JAN. 31, 2019

WPT INDUSTRIAL REIT (WIR/U:CT)

  • Then: $14.23
  • Now: $13.98
  • Return: -2%
  • Total return: 3%

ENBRIDGE (ENB:CT)

  • Then: $48.01
  • Now: $50.21
  • Return: 5%
  • Total return: 11%

MICROSOFT (MSFT:UW)

  • Then: $104.43
  • Now: $151.76
  • Return: 45%
  • Total return: 47%

Total return average: 20%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
WIR/U Y Y Y
ENB Y Y Y
MSFT Y Y Y

 

TWITTER: @MiddlefieldGrp
WEBSITE: middlefield.com