Bill Harris, partner and portfolio manager at Avenue Investment Management

Focus: Resource stocks
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MARKET OUTLOOK
Energy stocks are currently out of favour. We believe that oil and liquid-rich gas stocks at this level are an opportunity given that, we believe, the oil market will tighten over the next 12 months. However, the North American natural gas market is much harder to assess. There is a great deal of new natural gas coming on as a byproduct of the shale oil drilling in the Permian Basin.

We have to frame where we are now. Five years ago we were in a resource boom and we had a three-year roll over. The voice in my own head said play defence with resource stocks. Eighteen months ago was the bottom of the resource market. I said I didn’t know how low this is going to go, but just hold your breath and buy something. Now what’s interesting is that resource stocks are sliding. There’s nothing to light a flame under it today. We’re where we were 20 years ago where resource stocks were so cheap. The phone’s not ringing in Calgary. Stocks are genuinely cheap today. You can almost buy anything and the price will go up.

TOP PICKS

CANADIAN NATURAL RESOURCES (CNQ.TO) – Book $35

ALTAGAS (ALA.TO) – Book $33

ROXGOLD (ROXG.TO) – Book $0.66
 

PAST PICKS: MAY 10, 2016

• Please remember TRP and VET are total return investments with big dividends
• TRP: Dividend of four per cent over the past year
• VET: Dividend of six per cent over the past year

TRANSCANADA (TRP.TO) – Sold to switch back into ENB

• Then: $51.56
• Now: $63.49
• Return: 23.13%
• TR: 27.92%                             

VERMILION ENERGY (VET.TO)

• Then: $41.47
• Now: $44.79
• Return: 8.00%
• TR: 14.37%

OSISKO GOLD ROYALTIES (OR.TO)

• Then: $16.08
• Now: $16.59
• Return: 3.17%
• TR: 4.30%

TOTAL RETURN AVERAGE: 15.53%