Rob Lauzon, managing director and deputy CIO at Middlefield Capital Corporation
Focus: Global equities

MARKET OUTLOOK

U.S.-China trade tensions, which ostensibly cooled in recent weeks, have increased risk appetite and pushed U.S equities back near record-high territory. The trade war has been a dark cloud weighing on the global economy. Further progress toward a deal should provide more clarity on rebounding global economic growth. The improved dialogue between the two nations is encouraging, but we remain focused on earnings. We feel expectations have fallen enough that there is real potential for an upside surprise. Easing trade tensions, supportive monetary and fiscal policies in addition to the view that the EU and U.K. appear to progressing toward a Brexit resolution have investors rotating back into risk assets. We believe the economy remains strong enough to keep the bull market alive and to fend off recession fears as we enter 2020.

TOP PICKS

Rob Lauzon's Top Picks

Rob Lauzon, managing director and deputy CIO of Middlefield Capital Corporation, discusses his top picks: Westshore Terminals, Boardwalk REIT and Walt Disney.

WESTSHORE TERMINALS (WTE:CT)
Bought in October at $21.50.

Westshore is 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 (eight 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 set to materially increase. We are hopeful for increased dividends in the future.

BOARDWALK REIT (BEI-U:CT)
Bought in May 2019 at $42.50.

The Western Canadian population and economy is back to growth and the apartment rental market conditions are returning to a better sense of balance. Boardwalk has a well-aligned management team with a 25-per-cent ownership stake. We see operating income growth at 10 per cent yearly for the next couple years based on organic and value-add growth. Tenant inducements should decrease. Lower interest rates lead to improved re-financing costs. We see line of sight to a $50 net asset value in 18 months.

WALT DISNEY (DIS:UN)
Bought in July 2019 at $137.

Disney is a best-of-breed content owner (Star Wars, Marvel, Pixar, princess movies, Fox content, National Geographic). It’s highly integrated across business segments. The intellectual property is created in the studio and Disney monetizes the value through their other verticals. All demographics will be interested in the Disney+ streaming service. The box office looks strong (Frozen 2, Star Wars: The Rise of Skywalker).

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
WTE N N Y
BEI-U N N Y
DIS N N Y

 

PAST PICKS: OCT. 3, 2018

Rob Lauzon's Past Picks

Rob Lauzon, managing director and deputy CIO of Middlefield Capital Corporation, discusses his past picks: Horizon North Logistics, Transalta and Enbridge.

HORIZON NORTH LOGISTICS (HNL:CT)

  • Then: $3.20
  • Now: $1.01
  • Return: -68%
  • Total return: -68%

TRANSALTA (TA:CT)

  • Then: $7.19
  • Now: $7.84
  • Return: 9%
  • Total return: 11%

ENBRIDGE (ENB:CT)

  • Then: $43.44
  • Now: $47.62
  • Return: 10%
  • Total return: 17%

Total return average: -13%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
HNL N N Y
TA N N Y
ENB N N Y

 

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WEBSITE: middlefield.com