Paul Harris, partner and portfolio manager at Avenue Investment Management

FOCUS: North American and Global Equities

MARKET OUTLOOK:

We are still constructive on the market over the near term. The market has rallied very aggressively in the last two months after we saw the sell-off in Jan and Feb.

Near term we could see a little selling pressure, and we haven't been quite able to push through the psychological resistance on the TSX at 14,000.

With the federal budget coming out last we feel the Bank of Canada is now on hold with regards to any more rate cuts. The cuts that the BoC made last year are now making their way through the economy with the effect on FX rates. We are seeing this on strength in the Ontario, BC, and Quebec economies.

For the market to head higher from here we would need to see oil stabilize at these levels, or potentially move higher. Also the near term rally in the CAD dollar needs to subside. Further positive economic data out of Canada would also help provide another leg up for the market.

Big risks lurking still remain in China. They have needed to take on piles of new debt to add additional growth and stabilize their economy. Any further weakness out of China would provide serious headwinds for commodities, which would put pressure back on the TSX.

Top Picks:

Potash Corp (POT.TO)

It produces potash, phosphate and nitrogen to the agricultural and industrial industries worldwide. Next 6-to-12 months will be a difficult operating environment and pricing will remain weak, however long-term we are positive on the demand for postash growth and pricing. The stock pays a 6 percent dividend which we think the will cut but we would be a buyer as we like the longer term prospects for the company.

First Service Corp (FSV.TO)

It was recently spun out of Colliers International. The company focuses on residential property management and services. It has room to grow market share in the US in what remains a very fragmented business. Trades at 20x next year’s earnings and yields 1.3 percent.

Apple (AAPL.O)

Apple is the manufacturer and service company of computers and mobile devices. The stock trades at 10.6 times earnings and if you take into account it trades at 8 times earnings and has a 2.40 percent dividend yield. Although the next several quarters maybe difficult with poor iPhone sales we think we will see better earnings as new products are launched in the September quarter.

Past Picks:  May 28, 2015

DH Corp. (DH.TO)

• Then: $41.25
• Now: $34.35
• Return: -16.28%
• TR: -14.42%

Element Financial (EFN.TO)

• Then: $18.80
• Now: $14.70
• Return: -21.81%
• TR: -21.55%

Mainstreet Equity (MEQ.TO)

• Then: $38.25
• Now: $36.31
• Return: -5.07%
• TR: -5.07%

Total Return Average: -13.68%

Website: www.avenueinvestment.com