Stan Wong, portfolio manager at Scotia Wealth Management

FOCUS: North American large caps and ETFs 


Following a challenging three-month stretch, equity markets are regaining positive momentum this month with significant gains across major market indices. The MSCI World Index and S&P 500 Index are both up more than seven per cent month-to-date while the technology-heavy Nasdaq Composite Index has surged more than nine per cent. Here at home, the S&P/TSX Composite Index has advanced by over six per cent. Tumbling bond yields and subdued inflation data have lifted expectations that the U.S. Federal Reserve Bank’s aggressive rate hiking cycle may be concluding. Additionally, third-quarter U.S. corporate earnings results have exceeded expectations, providing further momentum for stocks. Seasonality factors may also be playing a helpful role, with the fourth quarter historically being the strongest part of the year.  

Major equity markets recently marked the one-year anniversary of the bull market, defined by a 20 per cent or more upswing. Despite a backdrop of geopolitical unrest, rising interest rates, and worries of a potential recession, the markets have displayed remarkable resilience. However, market breadth has been persistently limited, with the technology and communications sectors primarily driving the bulk of the returns over the past year. Moving forward, we anticipate a broadening of market breadth into other sectors, providing investors with a more diverse mix of market participation.

At the Stan Wong Group, our outlook on equity markets remains constructive. Inflation appears to be cooling with year-over-year (YoY) inflation in the U.S. now at 3.2 per cent, significantly lower than last summer’s high of 9.1 per cent. Looking ahead, stability is expected in both Bank of Canada overnight rates and the U.S. Federal Funds Rate, with potential downward movement by mid-2024. Historically, such a stable interest rate environment has provided a favourable backdrop for both equities and bonds. Furthermore, S&P 500 earnings estimates have improved, driven by better-than-expected economic data, robust U.S. consumer spending and a healthy labour market. Notably, based on 15 observations since 1950, the second year of a bull market for the S&P 500 Index has consistently delivered positive results, boasting an average return of 13.5 per cent.

In Stan Wong Managed Portfolios, we maintain our steadfast focus on identifying what we deem to be high-quality, secular growth companies to enhance our portfolio mandates. We favour the consumer discretionary, health care, and energy sectors, along with technology companies that exhibit reasonable valuations. Geographically, our equity allocation comprises approximately 51 per cent in U.S. equities, 29 per cent in Canadian equities, and 20 per cent in international equities. Within our fixed income allocation, we prefer government and investment-grade corporate bonds with both short and medium durations. Fundamentally, our overall strategic allocation is carefully constructed to enhance returns while prudently mitigating risk for our clients.

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Stan Wong's Top Picks

Stan Wong, portfolio manager at Scotia Wealth Management, discusses his top picks: Alphabet, Mckesson Corp., and Novo-Nordisk.


With over US$284 billion in expected fiscal 2024 revenues, Alphabet, the parent company of Google, is the world’s unrivalled leader in search and digital advertising. Its Android OS commands a 70 per cent market share in smartphones, and its portfolio includes YouTube, the world's largest video-sharing platform. With a rising demand for cloud services, Alphabet's cloud segment has seen strong growth, strengthening the company’s financial performance. Hardware sales (Chromebooks, Pixel smartphones, and smart home devices) contribute to diversifying revenue streams. Demonstrating its global reach and impact, Alphabet generates more than 50 per cent of its revenue from international markets. Near-term, Alphabet is positioned to benefit from a digital ad-spending rebound across its platforms. Among the major technology giants, Alphabet offers one of the more attractive valuations with the shares trading at 1.2x estimated PEG (price/earnings to growth) ratio. GOOGL shares have notably outpaced the broader S&P 500 Index since late 2022, signalling strong relative strength. In its latest quarterly results, Alphabet beat analyst expectations on both the top and bottom lines. Looking ahead, Alphabet is projected to deliver an impressive annual earnings per share growth rate of more than 18 per cent over the next several years. The company reports its next quarterly results on Feb. 2. 


McKesson Corp is a leading global pharmaceutical wholesaler engaged in the sourcing and distributing of branded, generic, and specialty pharmaceutical products to pharmacies. With over US$305 billion in forecasted 2024 fiscal year revenue, the company’s largest customers include CVS and Walmart. McKesson operates in a virtual triopoly, sharing market share with Cardinal Health (a name we also own) and Cencora, giving it significant leverage in supply negotiations and predictable cash flow. Longer-term, an aging population should result in greater spending volumes for prescription drugs. Today, nearly 60 per cent of all Americans use at least one prescription drug. This figure is expected to rise, particularly given the fast-growing demand for diabetes and weight-loss treatment drugs. Back in August, management unveiled a new US$6 billion share buyback program, highlighting its commitment to shareholder-friendly initiatives. In its most recent quarterly results, McKesson beat analyst expectations on both the top and bottom lines, while raising its earnings guidance for fiscal 2024. From a technical perspective, the chart for MCK looks attractive with the share price trading above ascending 200-day and 200-week moving averages and the shares outpacing the broader S&P 500 Index since early-2019. McKesson is forecasted to achieve an annual earnings per share growth rate of about 10 per cent over the next several years. The company reports its next quarterly results on Feb. 1. 


Headquartered in Denmark, Novo-Nordisk is a leading global healthcare company with over US$40 billion in forecasted fiscal 2024 revenue. Recently becoming Europe’s most valuable listed company by market capitalization, Novo-Nordisk is a global leader in diabetes care and obesity treatment drugs, producing half of the world’s insulin supply. Indeed, over 36 million individuals worldwide use Novo-Nordisk drugs. The company's optimistic outlook has been reinforced by soaring demand for key drugs like Wegovy and Ozempic. Wegovy, the company’s blockbuster weight loss drug, has also exhibited promising results in reducing major adverse cardiovascular events such as heart attacks and strokes, as recently highlighted in Novo-Nordisk's latest data presentation. Management recently raised its financial guidance and now expects sales growth of as much as 38 per cent this year and operating profit as high as 46 per cent. A recent Bank of America research report suggests a substantial upsurge in obesity treatment medication users in the U.S., forecasted to reach 48 million people by 2030, a drastic increase from the current one million users. The technical chart for NVO looks attractive with the share price trading above ascending 200-day and 200-week moving averages and the shares outpacing the broader S&P 500 Index since early-2017. Looking ahead, Novo-Nordisk is forecasted to deliver a remarkable annual earnings per share growth rate of over 25 per cent over the next several years. The Company reports its next quarterly results on Jan. 31. 




Past Picks:

Stan Wong's Past Picks

Stan Wong, portfolio manager at Scotia Wealth Management, discusses his past picks: Chevron, Visa, and Walt Disney.


  • Then: US$184.24
  • Now: US$142.21
  • Return: -23%
  • Total Return: -20%


  • Then: US$211.73
  • Now: US$249.22
  • Return: 18%
  • Total Return: 19%


  • Then: US$98.88
  • Now: US$94.32
  • Return: -5%
  • Total Return: -5%

Total Return Average: -2%