Jim Huang, president at T.I.P. Wealth Manager

Focus: North American equities
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MARKET OUTLOOK
The market has changed dramatically after the surprising election of Donald Trump as the incoming U.S. president.  Putting aside trepidation of trade wars and international tensions, investors betted heavily instead on his promises of accelerating infrastructural spending and deregulation. Major indices hit new high, interest rates spiked and rapid sector rotation ensued. The near-term outlook remains biased on the upside. However, the ultimate success of this market shift is by no means assured. Even with control of both chambers of the Congress, it is hard to predict if all or indeed many of the promised changes will come into fruition. Meanwhile, higher interest rate is a reality and coupled with the seasonal tendency for slowdown, first quarter of 2017 could see a marked reversal in the financial market. The economic expansion has been long in duration, and further stimulus at this stage may well accelerate the peak and subsequent valley. Portfolios should embrace the short-term strength yet be aware of over-exuberance.

TOP PICKS

TRANSCONTINENTAL (TCLa.TO)
Purchased Oct. 2016 at $17.91
Transcontinental is well known as a proven efficient commercial printer, as well as publisher for trade magazines. With the internet revolution obliterating all things paper, the traditional business has been in a slow decline for the last decade, thus the low valuation the stock is trading at. Transcontinental has continued to cut costs, consolidate operations and generate good free cash flows which are used to pay a generous dividend and expand into new areas of growth. With further expansion into the higher growth flexible packaging, Transcontinental has the potential of being rerated by the market while provides a sustainable yield.

INTERTAPE POLYMER (ITP.TO)
Purchased Oct. 2016  at $21.79
Intertape Polymer is a manufacturer of a variety of tapes and films for industrial and retail uses. It has spent the last few years lowering its costs, in part by opening new, large scale plants to replace older plants. It also enjoy the lower input costs from the shale natural gas production.  With a strong balance sheet, Intertape has the opportunity to selectively expand its footprints by acquiring smaller rivals and enhance shareholder value.

SLEEP COUNTRY CANADA (ZZZ.TO)
Purchased Oct. 2016  at $27.67
Well known (if not loved) for its cheeky jingo, Sleep Country Canada is the No. 1 mattress retailers in Canada. With consumers’ increasing focus on health and wellness, good quality mattresses enjoy a broadened market.  In Canada, the decline of mid-tier department store retailers opens the door for incremental market shares for strong operator. Sleep Country Canada has stepped up its powerful advertising campaign and expanded its offering to include higher margin accessories. Rejoining the public market just over a year ago, Sleep Country Canada is yet to be recognized by many investors as a dominant Canadian retailer.
 

PAST PICKS: NOVEMBER 10, 2015

DIRTT ENVIRONMENTAL SOLUTIONS (DRT.TO)

• Then: $7.42
• Now: $5.94
• Return: -19.94%
• TR: -19.94%

TRANSCONTINENTAL (TCLa.TO)

• Then: $20.95
• Now: $21.42
• Return: +2.24%
• TR: +6.36%

GEORGE WESTON (WN.TO)

• Then: $107.38
• Now: $113.02
• Return: +5.25%
• TR: +6.92%

TOTAL RETURN AVERAGE: -2.22%

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