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. Economic data continues to improve, for example, the ISM index is expanding, we have seen positive readings in retail sales, industrial production, and the job market and Consumer and small business confidence is also up. We are seeing strong earnings growth and topline revenue growth and 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: Bank of America, Cenovus Energy and Inter Pipeline.

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 reduce cost through reduction in headcount and technology. The company continues to improve its capital base with Tier 1 ratio at 13.60 per cent. The stocks trades at 0.9 times book value and 10.2 times 2018 earnings. The company is buying back stock and will be increasing its dividend over the next several years from its present yield of 2.0 per cent. We think the intrinsic value of US$38.

CENOVUS ENERGY (CVE.TO)
Is an integrated oil company. The stock has been under pressure due to a recent acquisition and the departure of the CEO. The stock trades at 5.71 times price to cash flow, 9.56 times EV/EBITDA and has a dividend of 1.6 per cent.

INTER PIPELINE (IPL.TO)
Is a petroleum transportation, storage and natural gas liquids processing business. The stock has suffered as interest rates have risen. The stock has  6.8 per cent dividend yield and trades at 9.52 times EV/EBITDA
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
 BAC Y Y Y
CVE Y Y Y
IPL Y Y Y


PAST PICKS: October 27, 2017

Paul Harris' Past Picks

Paul Harris, partner and portfolio manager at Avenue Investment Management discusses his Past Picks: Gilead Sciences, Nike and Kraft Heinz.

 GILEAD SCIENCES (GILD.O)

  • Then: $75.83
  • Now: $83.31
  • Return: 9.87%
  • Total return: 13.01%

NIKE (NKE.N)

  • Then: $51.89
  • Now: $53.24
  • Return: 2.60%
  • Total return: 3.99%

 KRAFT HEINZ (KHC.O)

  • Then: $87.69
  • Now: $77.48
  • Return: -11.64%
  • Total return: -9.15%

TOTAL AVERAGE RETURN: 2.61%
 

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

  WEBSITE: www.avenueinvestment.com