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Three top stock picks from Contra The Heard’s Benj Gallander

Benj Gallander of the Contra the Heard investment letter.

LOUIE PALU/THE GLOBE AND MAIL

Benj Gallander is president, Contra The Heard Investment Letter. His focus is contrarian investing.

Top Picks:

Extendicare (EXE.TO) Purchased in 2014 at $7.01
Demographics dictate that companies in this sector will have an expanding base of clientele. That means that if they are well managed, they should do well. It pays a lovely dividend.

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Rona Preferred Share A (RON.pa.TO) Purchased in 2015 at $16.21
Rona's same store sales are up, the bottom line has improved and the dividend was increased. The company has been performing strongly however the price of the preferred shares has been hurt with other reset preferreds.

Jinpan International (JST.O) Purchased in 2015 at $3.86
This is effectively an arbitrage play. There is a takeover offer by top management at $4.50. Last year they offered $8.80 a share but the deal fell through. This one has a better chance of success with a reasonable potential of a higher price than the $4.50.

Past Picks: October 8, 2014

Harmony Gold Mining (HMY.N) Buy Price - $2.42; Sale price -$0.70
The company has been running into severe headwinds so it was decided to take a tax loss to write it off against our recent 464-per-cent gain on Fidelity Southern, which was before dividends and a bump from the exchange rate.

Then: $2.13 Now: $0.80 -62.50% Total return: -62.50%

Iteris (ITI NYSE AMX) (ITI-A)

Then: $1.64 Now: $2.42 +47.56% Total return: +47.56%

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Cash (third pick)

Total Return Average: -4.98%

Market outlook:
It would not be surprising to see a major blowout in the next few years. In many respects, both the Canadian and global economies are in more dangerous places than in 2008. The debt load of Canadians' is an accident waiting to happen and the recent reductions in the interest rate will likely prove much more harmful than helpful as it gives people a false sense of security.

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