Teal Linde, manager at Linde Equity Fund

FOCUS: North American mid and large cap stocks


From December 2010 until April 2021, the S&P500 generated a return of 310 per cent, including dividends. In contrast, the TSX Composite has generated a mere 94 per cent. In fact, the U.S. market has outperformed Canadian in nine of the last ten years.

Much of the gain in the U.S. market is coming from soaring valuations instead of earnings growth. The price-to-earnings multiple for U.S. stocks in 2011 was only 13; in 2020 it was 30.7 (although somewhat inflated by earnings weakness caused by the pandemic). Canada has not seen anywhere near as dramatic an uptick in valuations.

The recent largesse of governments and central banks has also brought back the prospect of higher inflation. Shares of companies in commodity businesses tend to rise during inflationary periods. With one-quarter of the Canadian markets weighted in the Energy and Materials sectors, compared to just over five per cent in the U.S., a return of inflation would bode better for the Canadian market. Also, if higher interest rates were to emerge due to inflationary pressures, banks could benefit through increasing interest margins. Banks represent nearly 20 per cent of the Canadian market.

Outperformance by Canada or the U.S. tends to run in 10-12 year cycles. Now in the eleventh year of U.S. outperformance, it may be about to hand the performance baton back to Canada. However, while inflation risks are rising and Canada looks good, investors should still own rapidly growing U.S. stocks that can outrun the negative impacts of inflation. Just don’t aim for base hits. It is the doubles, triples and home runs in a digitizing economy that will deliver attractive returns for your portfolio over the long run, whether inflation is one per cent or four per cent.  


Teal Linde's Top Picks

Teal Linde, manager, Linde Equity Fund discusses his top picks: Ensign Energy, Equinox Gold and Aritzia.

ENSIGN ENERGY SERVICES (ESI TSX) – last purchased on May 7, 2021 at $1.15

Oil and natural gas prices are stronger today than they were before the pandemic. However, Ensign is still more than 50 per cent below where it traded last January. Insiders were actively buying below 50 cents last March – including Murray Edwards (who owns 20 per cent of Ensign), the CEO and CFO. Therefore, while the stock has recovered nicely off its lows, it still provides significant upside upon recovering to pre-pandemic level, supported by fully recovered oil and gas prices. Holding the company back is its large exposure to the US market where a wave of capital discipline has retrained publicly traded E&P companies from expanding their capex budgets. However, steep natural declines in the Permian where the company has most of its U.S. rigs, and rising cash balances is expected to prompt increased drilling budgets starting later in the year and into 2022, further supporting the recovery of the company’s share price.

EQUINOX GOLD (EQX TSX) – last purchased on May 11, 2021 at $10.35

Led by Ross Beaty as Chair, Equinox Gold is a multi-asset mining company and one of the only gold producers of scale operating entirely in the Americas. With assets evenly distributed across Canada, the United States, Mexico and Brazil, the company has seven producing mines and four fully funded growth projects that are expected to significantly increase production from an expected 650,000 ounces this year to 1.1 million ounces in 2024. The rate of new mine development and expansion gives Equinox one of the fastest growth profiles among its peers group. However, with much of its production expected from future dated development projects, Equinox also trades amongst the lowest price / NAV amongst those same peers, providing an attractive entry point. As the development projects are brought on stream and production and cash flow increases, the P/NAV discount is expected to dissipate resulting in a rising share price.

ARITZIA (ATZ TSX) – last purchased on May 7, 2021 at $31.61

Aritzia has spent the last 30 plus years establishing itself as an industry leader in Canada. It is now poised to expand into the Unites States leveraging e-commerce sales. Unlike most of their competition that already have built out 3, 4 or 500 brick and mortar locations that are mostly situated in malls with declining foot traffic, Aritzia only has 34 stores in the U.S. And this works very well for the company because in today's world, it no longer has to build out hundreds of stores to access U.S. consumers across the country, which is costly and takes many years to achieve. Aritzia can instead reach its customers much faster and more profitably through e-commerce, where existing stores, and others it will build, will serve mostly as flagship boutiques to promote and highlight the brand. E-commerce sales were up 81 per cent last quarter, representing 49.7 per cent of the company's net revenues. We expect Aritzia to achieve double digit revenue and EPS growth over the years ahead.




PAST PICKS: May 19, 2020

Teal Linde's Past Picks

Teal Linde, manager, Linde Equity Fund discusses his past picks: Ensign Energy, MTY Food Group and Western Forest Products.


  • Then: $0.59
  • Now: $1.05
  • Return: 78%
  • Total return: 78%


  • Then: $0.82
  • Now: $2.34
  • Return: 191%
  • Total return: 193%


  • Then: $21.10
  • Now: $57.18
  • Return: 171%
  • Total return: 171%

Total return average: 147%


 ESI TSX  Y   Y 


WEBSITE: www.lindeequity.com