Paul Harris is partner and portfolio manager at Avenue Investment Management. His focus is North American and global equities.
Top Picks:
Regions Financial
Regions is a commercial and retail bank in the U.S. southeast. The stock trades at .8 times book value, a dividend yield of 1.2 per cent and trades at 11.6 times earnings. The company will benefit from a continuing improvement of the U.S. housing market and a continued reduction in cost.
Leon's Furniture
Leon's sell furniture and appliances. It is a great Canadian brand that has a 3.0-per-cent yield and trades a 11.9 times earnings. A conservative estimate of the property they own is $6 a share. The company purchase of the brick should lead to further growth in the next several years.
TD Bank
We believe TD's strategy of growing it retail operations in the U.S. will be very effective over the long run. It's recent purchases were astute and at a low valuation. The stock trades at 11.0 times earnings and 1.9 times P/BV and has a 3.50-per-cent yield.
Past Picks: December 27, 2012
Davis & Henderson
Then: $21.30
Now: $29.46
Total return: +45.73 per cent
Bank of America
Then: $11.47
Now: $15.67
Total return: +36.98 per cent
Brookfield Asset Management ** spin off * Brookfield Property Partners April 15, 2013
Then: $36.11
Now: $41.03
Total return: +19.23 per cent
Total return average: +33.98 per cent
Market outlook:
We think the opportunity is increasing in companies that can achieve good total return – a good dividend yield accompanied by strong balance sheets and high cash flow cover. In a low inflation environment, these stock are likely to remain attractive.