James Telfser.
James Telfser is portfolio manager at Caldwell Investment Management. His focus is on Canadian equities.
Top Picks:
CCL Industries Inc.
This is a global label making company that is going through a major transformation after their acquisition of Avery Labels. They recently reported their first quarter as a combined company and significantly outperformed expectations. This is a very stable business in a highly fragmented industry which provides great opportunities on the acquisition front, but also organically. This is a great anchor stock for your portfolio and you do not have to pay up for it as it is trading at 15x 2014 projected EPS.
Canam Group Inc.
This steel construction product and service company has been showing a steady increase in gross margins, backlog and bookings. U.S. non-residential building has been depressed for a number of years and we believe that it will turn the corner over the next few years which should significantly improve the earnings potential of Canam Group. This is a very cyclical stock and one that you want to own in the early stages of a potential turnaround in non-residential building. Their valuation remains attractive at these levels and they recently re-initiated their dividend (1.2-per-cent yield).
Sandvine Corp.
This information technology company provides telecommunication businesses around the world the ability to analyze how their customers are using their data plans. If you can figure out how your customers are using the data you can charge them accordingly and hopefully offer better service while making larger margins. This part of their business has been driving a series of impressive quarterly reports and a number of new business wins. We believe they are the market leader in this space which should continue to see strong demand. This is one of the more growth-oriented names in the portfolio with 20-per-cent year-over-year revenue growth in 2013 and expected revenue growth of 20 per cent for 2014. We are comfortable with the valuation at 17x 2014 EPS given the growth potential.
Disclosure: | Personal | Family | Portfolio/Fund |
CCL.B | N | N | Y |
CAM | N | N | Y |
SVC | N | N | Y |
Past Picks: January 23, 2013
WestJet Airlines
Then: $21.66; Now: $26.05 +20.27%; Total return: +22.29%
International Forest Products
Then: $9.11; Now: $17.33 +90.23%; Total return: +90.23%
Davis + Henderson
Then: $21.80; Now: $28.86 +32.39%; Total return: +39.49%
Total return average: +50.67%
Disclosure: | Personal | Family | Portfolio/Fund |
WJA | N | N | Y |
IFP.A | N | N | Y |
DH | N | N | Y |
Market outlook:
We continue to find comfort in our portfolio of Canadian equities that are trading at 12x earnings, particularly since many have business models that will succeed regardless of what happens in troubled countries like Ukraine, Russia or Argentina. This portfolio is made up of a diversified selection of companies that should do very well if there is any kind of economic expansion this year, but will hang in there if there is not. We view this most recent correction in the U.S. and in many sectors in Canada as "healthy" as it gives investors a chance to get back into the market. We have also viewed this as an opportunity to add quality businesses to the portfolio that have paused or pulled back on their way to further price gains.