Don Lato.
Don Lato is president of Padlock Investment Management. His focus is on North American large caps.
Top picks:
Dick's Sporting Goods Inc.
With more than 700 stores throughout the U.S., Dick's Sporting Goods continues to grow toward its target of 1,000 stores. Earnings growth is expected to keep pace, with earnings expected to rise at over 15 per cent this year to $3.30 per share. The recent selloff provided an excellent entry point in a well-managed and growing company.
Cirrus Logic Inc.
Cirrus Logic has been caught in the downdraft of any company related to Apple Inc. over the past six months. Apple remains Cirrus's largest customer as it provides audio chipsets to all iPhones and iPads. The stock trades at just over six times March 2014 earnings, well over-compensating for the risks of having Apple as a dominant customer. As sentiment around Apple continues to improve, Cirrus should benefit from the updraft.
New Flyer Industries Inc.
The strong management team at New Flyer has led it through a difficult market environment for transit buses. The order book has improved over the past couple of quarters and, following its acquisition of the Daimler Buses Aftermarket operations, the company is well-positioned to once again begin to increase its bottom line. With a current yield of 5.7 per cent, the stock provides a great combination of a solid yield and capital appreciation potential as that order book is converted to an increase in the production rate.
Past Picks: March 02, 2012
Apple Inc.
Then: $545.18
Now: $453.32
Total return: –15.62 per cent
DuPont
Then: $51.45
Now: $48.97
Total return: –1.35 per cent
Parex Resources Inc.
Then: $7.24
Now: $4.54
Total return: –37.29 per cent
Total return average: –18.09 per cent
Market outlook:
U.S. equity markets have enjoyed their best first quarter in fifteen years as optimism has returned. Coming from severe pessimism in 2009, through the skepticism of the last few years, optimism leads to the final bull market stage of euphoria. Given the strong move thus far this year, a short-term setback is certainly possible but there is still plenty of time and upward movement before euphoria sets in. Padlock therefore remains constructive on equity markets in North America, particularly in the U.S.