David Baskin, President, Baskin Wealth Management

Focus: North American Large Caps

MARKET OUTLOOK:

Markets remain largely range bound in North America as growth continues to be elusive. With Europe in a highly confused state and China showing increasing signs of economic stress, even good employment growth is not enough to propel equities upwards. Bonds continue to surprise with yields falling to unprecedented levels worldwide. Commodities have been the biggest winners so far this year, but it is hard to see this trend continuing in the face of lackluster growth in both domestic and international demand. Our focus remains on companies with strong cash flow, good dividend yield and strong barriers to competition.

Top Picks:

Walt Disney Company (DIS.N)

Disney is a new holding in a category we call “experiential consumerism”. With theme parks, cruise ships, television and a huge library of archival media, Disney is well positioned to capture an increasing share of the disposable income of North America’s biggest demographic groups. The stock is not expensive with a Price:Earnings ratio slightly below market average and an attractive dividend yield of 1.5 per cent. We believe fears about the earnings from sports broadcaster ESPN are over-stated.

KAR Auction Services (KAR.N)

KAR Auction Services is the 2nd largest car auction and car salvage business in the U.S. Most cars coming off lease are sent to auction, so the auction business trails new car sales by about three years. KAR will have at least two to four more very busy years. With the number of miles driven rising due to low gasoline prices, the number of cars in accidents continues to rise, fueling the salvage business. The company pays a dividend of 2.8 per cent, and this should continue to rise.

FirstService Corp (FSV.TO)

FirstService Corp owns brands such as California Closets, Certa Pro, College Pro and Paul Davis. The company provides a wide variety of services to condominiums and gated communities, including landscape, maintenance and property management. The company is a consolidator in a very fragmented industry and has ample opportunity to grow. The company appears expensive with an above market valuation, reflecting the expected expansion in revenues and earnings.

Past Picks:  July 2, 2015

Precision Castparts (PCP.N) purchased by Berkshire Hathaway – Jan 29, 2016

• Then: $199.05
• Now: $234.95
• Return: +18.04%
• TR: +18.04%

TransForce (TFI.TO)

• Then: $25.68
• Now: $23.64
• Return: -7.94%
• TR: -7.94%

Equitable Group (EQB.TO)

• Then: $62.50
• Now: $53.65
• Return: -14.16%
• TR: -12.90%

Total Return Average: -0.03%

Twitter: @DavidBaskinBWM

Website: www.baskinwealth.com