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 is seeing some real improvements. Economic data continues to improve, the ISM index is expanding and we have seen positive readings in retail sales, industrial production, the job market, consumer confidence and small business confidence. We are also 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, Kraft Heinz and Cenovus Energy.

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 stock trades at 1.1 times book value and 11 times 2017 earnings. The company is buying back stock and will be increasing its dividend over the next several years from its present yield of 1.6 per cent, and should be from some proposed regulation changes. We think its intrinsic value is 38 dollars.

KRAFT HEINZ (KHC.O)
It provides food services and food products which include ketchup, Kraft Dinner etc. The stock has a 3 per cent dividend yield and trades at 20 times 2017 earnings. Continue to see cost cutting and organic growth through better distribution of Kraft products through the Heinz distribution network.

CENOVUS ENERGY (CVE.TO)
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.

 

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

PAST PICKS:  NOVEMBER 29, 2016

Paul Harris' Past Picks

Paul Harris, partner and portfolio manager at Avenue Investment Management, discusses his past picks: Gilead Sciences, Nike and AutoCanada.

GILEAD SCIENCES (GILD.O)

  • Then: $74.87
  • Now: $73.74
  • Return: -1.50%
  • Total return: 1.30%

NIKE (NKE.N)

  • Then: $50.03
  • Now: $55.16
  • Return: 8.94%
  • Total return: 10.47%

AUTOCANADA (ACQ.TO)

  • Then: $20.30
  • Now: $23.13
  • Return: 13.94%
  • Total return: 15.57%

TOTAL RETURN AVERAGE: 9.11%
 

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

WEBSITE: www.avenueinvestment.com