Paul Harris, partner and portfolio manager at Avenue Investment Management

Focus: North American and global equities
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MARKET OUTLOOK
The global economy continues to see some real improvements and economic data continues to improve; the ISM index is expanding and we have seen positive readings in retail sales, industrial production, the job market and consumer confidence as well as small business confidence. We are also seeing strong earnings growth and topline revenue growth, not the deterioration in margins that some have been expecting. As a result, many of the central banks around the world are looking to slow QE or increase rates. However, we believe we will see low inflation and low interest rates for some time as central banks will not want to run the risk of pushing the economy into a recession.

TOP PICKS

Paul Harris' Top Picks

Paul Harris, partner and portfolio manager at Avenue Investment Management, discusses his top picks: Loblaw, Roxgold and Bank of America.

LOBLAW (L.TO)
Loblaw is the largest grocery chain in Canada and owns Shoppers Drug Mart. The company invested heavily in IT and supply-chain systems over the past several years, which have allowed the company to gain strong operating leverage in the current environment. The Shoppers acquisition in 2014 enhanced the amount of free cash flow that the overall company generates. Loblaw has also invested heavily in their online grocery shopping offering, which puts the company in a good position to protect its market share from other online grocery competitors.

ROXGOLD (ROXG.TO)
Roxgold is a Canadian gold company whose gold project is in Burkina Faso, West Africa. The company has an operating mine that presently has free cash of $60 million and an eight-year mine life. We believe with further exploration, they will be able to extend the mine life, and they’ve recently found a significant hole. We see this company going from its present market cap of $400 million to $600 million.

BANK OF AMERICA (BAC.N)
Bank of America is one of the largest banks in the United States holding 10 per cent of all deposits in the country. The bank continues to cut cost through reductions in headcount and technology. The company continues to improve its capital base with a Tier 1 ratio of 13.60 per cent. The stock trades at 1.0x book value and 11.5x 2018 earnings. The company is buying back stock and will be increasing its dividend over the next several years from its present yield of 1.2 per cent. We think the intrinsic value of $38.
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
L Y Y Y
ROXG Y Y Y
BAC Y Y Y


PAST PICKS: SEPTEMBER 15, 2016

Paul Harris' Past Picks

Paul Harris, partner and portfolio manager at Avenue Investment Management, discusses his past picks: Kraft Heinz Co., Apple and Nike.

KRAFT HEINZ (KHC.O)

  • Then: $89.17
  • Now: $86.46
  • Return: -3.03%
  • Total Return: -1.02%

APPLE (AAPL.O)

  • Then: $115.57
  • Now: $161.06
  • Return: 39.36%
  • Total Return: 41.26%

NIKE (NKE.N)

  • Then: $55.47
  • Now: $59.90
  • Return: 7.98%
  • Total Return: 9.08%

TOTAL RETURN AVERAGE: 16.44%
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
KHC Y Y Y
AAPL Y Y Y
NKE N N N


WEBSITE: www.avenueinvestment.com