Paul Harris, partner and portfolio manager at Avenue Investment Management

Focus: North American and global equities
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MARKET OUTLOOK
The four big U.S. stock indices hit record highs last week. This is the first time this has happened since 1999. Since the Trump election, investors have cheered the prospects of tax reform, tax cuts, deregulation and fiscal stimulus. There has been a shift to equities as the bond market has performed poorly (yields up, prices down) with many pundits calling the end of the bull market in bonds. If Mr. Trump is able to accomplish the above agenda, we should see better equity markets. The equity markets will also be helped by better earnings growth, which turned positive in Q3, and since many companies have great cost structures we will see better leverage to the bottom line.

TOP PICKS

GILEAD SCIENCES INC. (GILD.O)
Gilead is a pharmaceutical company with drugs for Hepatitis C and HIV. The company trades at 6.5 times earnings and has a dividend yield 2.5 per cent and a free cash flow yield of 13 per cent.

NIKE INC. (NKE.N)
Nike is engaged in the design, development, marketing and selling of athletic footwear, apparel and equipment. It has a great global brand which continues to grow its online presence and its emerging markets revenue. The stock has underperformed of late and we see this as a good opportunity to purchase the stock. It trades at 25 times earnings and has a 1.16 per cent dividend yield.

AUTOCANADA INC. (ACQ.TO)
AutoCanada is an auto dealership company. The company offers a diversified range of products from sales, services and financing. The stock trades at 12 times earnings, has a dividend yield of 2.0 per cent and has free cash flow of $50 million per year.
 

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


PAST PICKS: NOVEMBER 9, 2015

FIRSTSERVICE CORP. (FSV.TO)

  • Then: $47.05
  • Now: $58.32
  • Return: +23.95%
  • TR: +25.20%

BANK OF AMERICA (BAC.N)

  • Then: $17.68
  • Now: $20.29
  • Return: +14.76%
  • TR: +16.44%

JOHNSON & JOHNSON (JNJ.N)

  • Then: $100.84
  • Now: $112.48
  • Return: +11.54%
  • TR: +15.52%

TOTAL RETURN AVERAGE: +19.05%
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
FSV Y Y Y
BAC Y Y Y
JNJ N N N


WEBSITE: www.avenueinvestment.com