John Petrides, managing director and portfolio manager at Point View Wealth Management
FOCUS: U.S. equities
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MARKET OUTLOOK

Stocks continue to rise and investors continue to embrace the goldilocks scenario for the market. GDP growth is ok at 2.5 to 3 per cent, but not stellar for this late in the cycle. Interest rates are gradually rising and coming out of financial crisis monetary policy. This all keeps inflation at bay.

Stocks are expensive relative to the past 5, 10, 15 years, but in relation to inflation and interest rates they remain attractive. There is a healthy skepticism among investors waiting for the next shoe to drop in stocks; there has not been a down month all year in the S&P 500. That being said, this leads me to believe a stock selloff will be short-lived.

TOP PICKS

WILLIAMS-SONOMA (WSM.N)
One of the leading home retailers. The attractiveness of the stock is the company has no debt on the balance sheet. At current prices it offers a dividend yield over three per cent and they get about 50 per cent of sales from e-commerce. In a world where Amazon is dominating the big box store, WSM has an established online presence already. At current valuation the stock is very attractive.

GLAXOSMITHKLINE (GSK.N)
Health care has had a strong run, as well as international stocks year to date. GSK has not followed suit. At current prices the stock offers investors a five per cent dividend yield. They have three very strong and distinct business units in HIV, vaccines and consumer. At current value the company is worth more in parts than as a whole. 

CONOCOPHILLIPS (COP.N)
The fundamentals of the energy sector continue to improve. Supply growth is coming down and global GDP is healthy which will support demand. 2016 was a year COP management would like to forget. When oil prices collapsed, COP was forced to cut the dividend. Management entered the year looking to sell non-core assets to repair its balance sheet. They targeted US$5-7 billion in asset sales. This year they have sold over US$13 billion in assets. They are paying down debt and buying back stock. They have more assets they are looking to sell. In a volatile energy market investors want to stay with the highest quality companies and COP is one of them.
 

PAST PICKS:  FEBRUARY 9, 2017

MATTEL (MAT.O) 
Continue to recommend buying the stock, although it has been a big underperformer year to date. Hasbro recently announced that toy sales could be weak and MAT sold off in sympathy. New management is from Google and not from the traditional toy industry. We find this healthy given the amount of disruption going on in the industry. The company needs a fresh way of doing business. MAT has very strong brands in Barbie, American Doll and Fisher Price. All of these brands can be utilized more effectively in the digital economy. The stock selloff has created a great long-term buying opportunity for investors.

• Then: $25.83
• Now: $15.30
• Return: -40.74%
• Total return: -38.28%

AMDOCS (DOX.O)
Continues to trade at attractive prices. The company continues to have a rock solid balance sheet and generated tremendous free cash flow. Management has done a solid job of returning cash to shareholders through buying back stock and growing the dividend.

• Then: $59.10
• Now: $65.86
• Return: 11.43%
• Total return: 12.60%

HANESBRANDS (HBI.N)
The long-term growth opportunity is still intact for HBI and international expansion. The company gets less than 20 per cent of its sales from emerging markets and we think that will help drive future earnings growth. Although the stated dividend is ok at two per cent, the company has grown the dividend at 25 per cent clip over the past four years.

• Then: $20.24
• Now: $22.97
• Return: 13.48%
• Total return: 15.82%

TOTAL RETURN AVERAGE: -3.28%

TWITTER: @j_petrides
WEBSITE: www.ptview.com