Paul Harris is partner and portfolio manager at Avenue Investment Management. His focus is North American and global equities.
Bank of America Corp.
Bank of America is one of the largest banks in the United States holding 10 per cent of all deposit in the country. The bank continues to restructure by selling off non-core assets and reducing cost through reduction in headcount. The company continues to improve its capital base. The stocks trades at .7 times tangible book value and 10 times earnings. The company is buying back stock and will be increasing its dividend over the next several years.
Deere & Co.
We see Deere as well-positioned to benefit from long-term trends toward increased crop production and consumption. The stock is cheap, trading at 10.5 times earnings and has a dividend yield of 2 per cent.
Target operates general merchandise discount stores in North America. The stock has suffered lately over its expansion into Canada and the security breach of their credit card information. Many of these seem to be behind the company and with the continued positive economic growth in the U.S. we think the stock looks cheap. It trades at 13 times earnings and has a dividend yield of 2.8 per cent.
Past Picks: March 26, 2013
SunTrust Banks Inc.
Then: $28.74 (U.S.); Now: $39.62 +37.86%; Total return: +39.47%
Then: $12.55 (Cdn.); Now: $15.66 +24.78%; Total return: +28.48%
Bell Aliant Inc.
Then: $26.54; Now: $26.62 +0.28%; Total return: +7.62%
Total return average: +25.19%
"Now" figures are intraday from the date of the analyst's appearance on BNN Market Call.
Global stocks should continue their slow long-term "grind" higher due to low interest rates, high corporate probability and continued global GDP expansion. Concern emanates from the 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 slowly withdraw monetary liquidity. 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.