Skip to main content

The Globe and Mail

3 top stock picks from Avenue Investment’s Paul Gardner

Paul Gardner is a partner and portfolio manager at Avenue Investment Management. His focus is on fixed income, large cap dividend-paying stocks and REITs.

Top picks:

Wells Fargo & Co.

Story continues below advertisement

WFC is a "best in class" bank in the United States. Avenue Investment believes that the U.S. housing industry is improving rapidly. WFC will directly participate in the housing recovery through its mortgage book and improving loan loss provisions. WFC trades at a discount to its book value. We believe it should trade at 1.5 x BV.

Vidéotron Ltée 7.125 per cent, 1/15/2020

The high-yield debt is wholly owned by Quebecor Inc. Avenue believes the bonds still have value, yielding around 5.5 per cent. Videotron is the main cable operator in Quebec and has substantial free cash flow. The stability of the company and its consistent earnings profile allow a Videotron debt holder to obtain a high yield without the volatility of owning the parent company Quebecor.

Bell Aliant Inc.

Bell Aliant is the one of the largest telecom providers in the Atlantic area, and rural markets in Ontario and Quebec. The company pays a high dividend and generates substantial free cash flow. Although the dividend policy is questionable, we believe that their fibre buildup will attract new clients and increase market share.

Past picks: Nov. 16, 2011

Yellow Media Inc. 7.30 per cent, 02/02/2015

Story continues below advertisement

Total return: +55.00 per cent

Mainstreet Equity Corp.

Then: $18.65

Now: $30.86

Total return: +65.47 per cent

Sherritt International Corp. 8 per cent, 11/15/2018

Story continues below advertisement

TR: +14.00 per cent

Total return average: +44.82 per cent

Market outlook:

The stock markets of the world are cheap on absolute and relative terms. On the other hand, we think the bond market is expensive. We believe that in the near and medium term the equity market will outperform the bond market. As well, companies with sustainable balance sheets and low leverage that can consistently produce distributions will continue to be highly desirable in this low interest rate environment. We will continue to see stable and growing profit growth from the U.S. and its underlying diversified economy.

Report an error
Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at privacy@globeandmail.com.