Fabrice Taylor, publisher, the President’s Club Investment Letter
FOCUS: Canadian small and mid-caps
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MARKET OUTLOOK
Corrections are inevitable and we haven’t had a big one for years. We’re due. Stocks aren’t cheap, interest rates are rising and central banks, the Fed in particular, are shedding yielding assets. It would be foolish to assume that’s not risky, given that we’ve never seen trillions of assets hit the market, even if they do so gently. There’s always something to buy, but putting cash aside for the inevitable big pullback is a good idea. 

TOP PICKS

TORC OIL & GAS (TOG.TO)
Is an oil-weighted producer in Western Canada that is focusing on generating free cash flow and increasing its dividend. It generates free cash at roughly current prices and management is targetting growth that is accretive to cash flow rather than reserves or just production, since the market isn’t really paying for that at the moment. I view it as a defensive way to play oil, which I believe could be in for a run to about US$75/barrel. TOG pays investors to wait with a dividend that yields about 4 per cent and a relatively conservative strategy. Last purchase at $6.

TECK RESOURCES (TECK.TO)
Is a premier mining company trading at a 7 times earnings and a 10 per cent discount to book value. Commodity prices are low although some have started to move higher. At the top of the cycle Teck should trade at a premium to book value, so there’s is potentially a lot of upside here. The company pays a modest dividend but is also buying back stock with free cash flow, which should help the stock price. Last purchase at $26.

SIYATA MOBILE (SIM.V)
 Is the world’s only manufacturer of push-to-talk, cellular, vehicle-mounted radios in the world. The company acquired a lot of assets and people from Motorola Israel and some Canadian cellular boosting technology. The push-to-talk industry is undergoing major technological change. It’s fragmented and the dominant technologies are still radio waves or low-bandwidth cellular. The shift is toward 4 and 5g, and the big cell players - AT&T, Sprint, etc. - want a piece of the action to boost growth. Siyata is developing products for this market and if they succeed in getting in with the big cellular telcos, the stock price will multiply from the current level. I last bought at 62 cents. 

PAST PICKS: September 9, 2016 

NEW FLYER INDUSTRIES (NFI.TO)
I sold NFI because I first bought it for $8 and felt the easiest money had been made after a 6x increase plus a dividend. 

• Then: $42.29
• Now: $51.38
• Return: 21.49%
• Total return: 25.01%

 LIQUOR STORES N.A. (LIQ.TO)
I own and have added to LIQ because I still think the Alberta economy will bounce back with oil prices and because the company was subject to a proxy battle which brought new management and directors. Plus, they may get the right to sell marijuana.

• Then: $10.56
• Now: $9.85
• Return: -6.72%
• Total return: -3.09%

NEO LITHIUM (NLC.V)
I still own Neo Lithium because I believe it is a world-class asset with tremendous takeout potential. Bigger institutions have invested at about the current price which gives me confidence in the project. 

• Then: $1.48
• Now: $1.44
• Return: -2.70%
• Total return: -2.70%

TOTAL AVERAGE RETURN: +6.40%