Paul Gardner is partner & Portfolio Manager at Avenue Investment Management. His focus is fixed income, large-cap dividend-paying stocks & REITs.
Top Picks:
Leon's Furniture Ltd.
Leon's is now the largest company in the sector with its merger of The Brick, and earnings are growing with the help of The Brick acquisition. Historically, Leon's trades at 16X P/E is only trades at 12x. The company has ample free cash flow, and in this tough environment for retail is still performs about its peers.
Mainstreet Equity Corp.
Mainstreet Equity assets are mostly apartments in Calgary and Edmonton, and in Surrey, B.C. The company trades at a significant discount to NAV and its assets are in areas that are benefiting from low vacancy areas.
Timbercreek Mortgage
Timbercreek is a mortgage lender that lends to apartment developers and other income-producing properties. The shares have been depressed due to selling of shares by financial advisers that no longer receive a trailer commission since they now are a corporate entity and not a closed end fund.
Past Picks: January 21, 2013
BTB REIT
Then: $4.67; Now: $4.59; Total return: +7.96%
Bell Aliant Inc.
Then: $26.40; Now: $26.04; Total return: +5.86%
Leon's Furniture
Then: $14.12; Now: $14.93; Total return: +9.07%
Total return average: +7.63%
Market outlook:
Global stocks should continue their slow, long-term "grind" higher due to low interest rates, high corporate probability and continued global GDP expansion. Concern comes from emerging markets that have a continued lack of visibility. Bond yields will continue to stay low for the short- and medium-term as central banks withdraw monetary liquidity slowly. If the emerging markets recover, Canada with the help of a depreciated currency should outperform its U.S. counterpart.