Rick Stuchberry, Portfolio Manager, Richardson GMP
Focus: North American large caps and international ADRs
We continue to believe this is a secular bull market, and it is important to keep capital invested. We think the move to normalize interest rates will add stability to the market, and any shudders will be shrugged off just like the January correction following the last rate increase. The market just had a 1.5-year sideways consolidation and although a correction is possible, we view it as less likely and think the market will continue to surprise to the upside. One reason for this upside surprise could be that bond yields may have bottomed over the summer over Brexit fears, and so as bond prices fall, equities may rise.
Our portfolio is geared to take advantage of rising interest rates and yields, younger demographics and technology investments for the modern economy. We look at the utilities and income stocks trading at record multiples and fear the risks investors have taken piling into income stocks in such a low-rate environment, and thus we are exceptionally cautious in those sectors.
Home Depot (HD.N)
Home Depot is the best run company in the home improvement space. We see it as both a consumer and a demographic investment as younger demographics begin to form households and have children. We are comfortable with the balance sheet and really like the dividend policy — half of earnings are dividends.
Clearly visible in the modern world is the importance of healthy lifestyles. We like Nike because it is an international, growth-oriented and mature business in North America. This company constantly battles competitors and will not easily yield its leadership.
ING Groep NV (ING.N)
ING Bank is a northern European financial that has completely transformed post-financial crisis. They renewed their core focus on Europe from abroad and have increased investment in technology. They continue to operate well and re-instated a dividend after paying off the government bailout.
Past Picks: August 31, 2015
- Then: $54.71
- Now: $54.18
- Return: -0.97%
- TR: +0.39%
- Then: $66.12
- Now: $101.54
- Return: +53.57%
- TR: +53.57%
General Electric (GE.N)
- Then: $24.82
- Now: $29.88
- Return: +20.39%
- TR: +24.28%
Total Return Average: +26.08%
Past Pick Update
Badger Daylighting (BAD.TO)
Wonderful company, but a short seller that built up a huge short position and was caught on the trade. It continues to execute quite well and make money. We took a nice profit and still like the company and would consider going back in down the road. We saw an opportunity to raise cash during the summer at a nice profit and we took it.
Managed accounts profile: As of August 31, 2016
- 1 year: Equity 11.3%, Balanced 9.8%, Index* 8.7%
- 3 year: Equity 8.9%, Balanced 7.5%, Index* 8.1%
* Index: S&P/TSX Total Return Index