Rob Lauzon, managing director and deputy chief investment officer, Middlefield Capital Corporation 
FOCUS: Global stocks

MARKET OUTLOOK:
We are constructive on equities overall as we approach the end of the year. The outlook for demand is strong, businesses are well-capitalized and the consumer is very healthy. With that said, we see several risks that need to be addressed before markets can reach new highs. 

First, energy prices have surged to all-time highs in certain geographies including Europe and China, causing manufacturing and industrial outputs to be curtailed. Second, uncertainty in Washington with regards to the Democrats’ reconciliation bill and the debt ceiling remains elevated. Finally, supply chain disruptions and shipping delays are expected to pressure margins and impact the upcoming Q3 earnings season.  

While we are confident that each of these issues will ultimately be resolved, we recognize market volatility could remain elevated while they remain outstanding. We recommend investors opportunistically take advantage of market pullbacks given our constructive view on long-term fundamentals and the improving technical setup as market momentum and breadth recover from September lows.


TOP PICKS:

Okta (OKTA NASD)
Last bought $233.12 on October 6, 2021
An increasingly distributed workforce has created more challenges for enterprises to effectively secure employee access to applications and data. This dynamic is shifting a greater portion of security budgets towards identity and access management. Okta is a share gainer in a growing market for this type of cybersecurity software.

Topaz Energy (TPZ TSX)
Last bought $17.20 on October 6, 2021
We believe Topaz is a compelling way to gain exposure to the increase in oil and natural gas prices through royalties, while its infrastructure assets provide enhanced stability relative to other royalty options. TPZ offers a healthy yield, and its strategic relationship with Tourmaline suggests organic growth for the company. Recently acquired assets, which are predominantly zero emissions and world class CCUS operations, significantly support the company’s already strong ESG narrative. We expect continued dividend growth from Topaz, on the back of two increases in 2021.
 
Enphase Energy (ENPH NASD) 
Last bought $182.8 on July 28, 2021
This company is one of our preferred holdings within the solar industry with its core inverter product. Enphase is well positioned to capitalize on macro tailwinds such as continued growth in residential solar and increased penetration of energy storage. The company should also enjoy fundamental leverage as rising demand and improving margins lead to higher profitability. While the stock has performed exceptionally well over time, we do not view it as expensive on a growth-adjusted basis.

PAST PICKS: October 19, 2020

WPT Industrial REIT (WIR-U TSX) 

• Then: $13.12
• Now: $21.65
• Return: 65%
• Total Return: 70%

Canadian Apartment Properties REIT (CAR-U TSX) 

• Then: $43.96
• Now: $59.18
• Return: 35%
• Total Return: 38%

Smartcentres REIT (SRU-U TSX) 

• Then: $20.55
• Now: $30.78
• Return: 50%
• Total Return: 59%

Total Return Average: 56%