Stuart Hinshelwood is U.S. Equities Specialist at BMO Nesbitt Burns.
Top Picks:
Abbott Labs
- diversified healthcare stock (nutritionals, med-tech devices, pharmaceuticals),
- decent growth for decent valuation ~14.5 NTM earnings of ~2.30 2014 EPS,
- Decent Q3 earnings and guidance,
- 57-per-cent increase in dividend (2.40-per-cent yield)
Kraft Foods
- strong brands, good pricing + volume trends,
- valuation not egregious at 17.0x $3.20E 2014 EPS + 4-per-cent dividend,
- reinvigorating older brands and introducing new ‘core’ categories,
- margin improvement via cost controls which has long runway in sector
ConocoPhillips
- no commentary
Past Picks: July 12, 2013
CSX Corp
Then: $24.36
Now: $26.28
Total return: +8.54 per cent
Qualcomm
Then: $62.02
Now: $69.90
Total return: +13.30 per cent
Coca-Cola
Then: $41.03
Now: $39.61
Total return: -2.76 per cent
Total return average: +6.36 per cent
Market outlook:
U.S. markets are fairly valued, neither cheap nor egregiously expensive ($120 EPS times 15x = 1800). so upside of two to five per cent fundamentally, but could move beyond that range due to economic momentum, positive housing data, sentiment, Fed liquidity and lack of alternatives (i.e. bonds) or other developed markets (emerging markets still not looking good, Europe only slightly better).