Lorne Steinberg.
Lorne Steinberg is president and portfolio manager at Lorne Steinberg Wealth Management. His focus is on value stocks and high-yield bonds.
Top picks:
Alcoa Inc.
Aluminum demand will increase due to more stringent fuel standards for automobiles. Alcoa is presently trading at a fraction of its price at the top of the cycle. Aluminum prices are at a cyclical low and earnings are poised to rise by the end of 2013.
Joy Global Inc.
Joy Global is one of the largest manufacturers of specialized mining equipment with only one major competitor. Despite the drop in commodity prices, the company is benefiting from the expansion of coal-operated power plants in China and India. The shares are very cheap at nine times earnings, and the company will benefit from global economic improvement.
Yushiro Chemical Industry Co. Ltd.
Yushiro is a leader in specialized lubricants and chemicals for metalworking. It operates in niches with few competitors. It is trading at an steep discount to tangible book value, pays a 3-per-cent dividend and will benefit from the weakness of the Japanese yen. A significant earnings recovery is well under way which makes these share a compelling investment.
Past picks: Sept. 11, 2012
Manulife Financial Corp.
Then: $11.75
Now: $14.77
Total return: +28.14 per cent
Total SA
Then: $52.65
Now: $50.28
Total return: –0.22 per cent
Hirano Tecseed Co. Ltd.
Then: ¥411
Now: ¥916
Total return: 127.4 per cent
Total return average: +51.77
Market outlook:
The best value opportunities are outside North America. The Canadian market has lagged due mostly to weak commodity prices – a situation that may continue for some time. While much of Europe is still in recession, the worst appears over and there are some excellent values to be found, most notably among financial service companies. Japan has had a decent rally in 2013 but it remains the cheapest developed market with plenty of upside, especially in the small- and mid-cap sectors.