Lyle Stein, senior portfolio manager and managing director at Vestcap Investment Management 

Focus: Canadian equities
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MARKET OUTLOOK
Since the election of Donald Trump in November, the "animal spirits" have carried markets to new highs around the world. Led by the U.S., which has been led by NASDQ, markets have fully bought in to the idea that the Trump magic will deliver everything promised: lower taxes, less regulation, and infrastructure spending. Concern about the Fed raising interest rates has been blown off as visions of earnings growth swamp the risks of shrinking valuations. (As interest rates rise, P/E ratios should fall.) The market is going up because monies are flowing into stocks. Like Toronto housing, there is general "Fear of Missing Out,” or “FOMO," that has captivated investment thinking. We don't know when it ends, but it always ends badly. We see disappointment risk as being high, especially given the fact that none of the Trump proposals have yet to be fully endorsed, yet alone accepted, by a wary U.S. Congress. 

TOP PICKS

BCE (BCE.TO)
Acquisition of MTS now complete. Opportunity for executing on synergies. Stable cash flow growth, near five per cent dividend yield. Poor sentiment make it attractive as a new add to portfolios.

TD BANK (TD.TO)
Recent media concerns have created opportunity to buy TD at discount multiple to banks. Provides backdoor U.S. exposure, 14 per cent ROE, growing dividend plus share buyback. 3.6 per cent yield beats bond. 

PRAIRIESKY ROYALTY (PSK.TO)
Royalty model provides stability in the storm, and long-term upside to oil recovery. Recently raised dividend by four per cent and at $0.75 provides a 60 per cent payout. 2.6  per cent yield beats bond. Safe way to add direct production exposure to portfolios.

Each pick has been purchased at current levels.
 

PAST PICKS: MARCH 31, 2016

AGNICO EAGLE MINES (AEM.TO)

• Then: $46.99
• Now: $56.60
• Return: +20.45%
• TR: +21.48%

NORTHLAND POWER (NPI.TO)

• Then: $21.42
• Now: $24.41
• Return: +13.95%
• TR: +18.94%

HIGH LINER FOODS (HLF.TO)

• Then: $15.00
• Now: $17.90
• Return: +19.33%
• TR: +22.57%

TOTAL RETURN AVERAGE: +21%