Barry Schwartz, vice president and portfolio manager with Baskin Financial Services
Barry Schwartz is vice president and portfolio manager at Baskin Financial Services. His focus is North American large caps.
Top Picks:
KP Tissue Inc.
KP Tissue, the leading branded tissue company in Canada, is now making in-roads in the U.S. via its relationship with Wal-Mart. Its new manufacturing facility in Memphis will allow KP to increase its U.S. tissue capacity and target new private label relationships. KP has a current dividend yield of 4.3 per cent.
Dorel Industries
After reaching a multi-year high in May, Dorel's stock fell 20 per cent in June due to an earnings warning. A cool start to summer has hurt Dorel's bicycle division, but the drop in the stock price is an overreaction. Patient investors will be rewarded with an excellent buying opportunity. The stock offers a dividend yield of 3.3 per cent and we project a dividend increase this year.
Whistler Blackcomb
Whistler Blackcomb Holdings Inc. operates the mountain resorts of Whistler Blackcomb. The company generates most of its revenue from lift tickets, and it has been able to raise its prices every year for the past 13 years. It offers an attractive dividend yield of about 7 per cent and there is potential for an increase in 2014.
Past Picks: July 12, 2012
Molson Coors
Then: $40.73
Now: $47.54
Total return: +20.11 per cent
Empire Company
Then: $56.00
Now: $80.68
Total return: +45.80 per cent
SABESP SA
Stock Split: 2 for 1 – 1/24/2013
Stock Split: 3 for 1 – 4/30/2013
Then: $74.49
Now: $9.77
Total return: -19.53 per cent
Total return average: +15.46 per cent
Market outlook:
We continue to find plenty of "fat pitch" investment ideas in this environment. Our attention is focused on companies with a history of rising dividends, good balance sheets and low valuations. Macro events can be unsettling, but they will not distract us. We still favour U.S equities, but we feel there are more attractive opportunities now in Canada. Investors will be best served with a zero-weight exposure to gold and other metals. Keep your fixed income maturities short, and start to pick away at floating rate products. REIT's and other income-oriented securities are still recommended in moderation, but investors should beware of what will happen when rates get back to normalized levels.