John O'Connell is chairman and CEO of Davis Rea. His focus is North American large caps.
Spartan Energy (SPE TSX-V)
Spartan is a rapidly growing oil company with an excellent balance sheet that has acquired excellent lands predominantly in southeast Saskatchewan. The management team has a track record of delivering exceptionally high returns for its shareholders. We believe that the lands acquired from competitors who were unable to exploit the resource because they were hamstrung by having to pay high dividends will allow Spartan to grow production rapidly in a high return low risk manner.
Apple Inc. (AAPL NASDAQ)
Apple is an outstanding company with a great balance sheet, outstanding products and a deep pool of talent that we feel confident will continue to deliver above average returns well into the future. Investors are paid a handsome dividend while the company continues to build new products, software and IT ecosystem.
Google Inc. (GOOGL NASDAQ)
Google is an innovator's dream with the balance sheet strength to acquire the pieces of the puzzle that it does not develop itself. They have dominant positions in so many of the everyday applications we use and are developing technologies for where we are likely to be in 10 years.
Past Picks: March 25, 2013
AltaGas (ALA TSX)
Then: $34.90; Now: $49.09 +40.66%; Total return: +47.16%
Morguard North American Residential REIT (MRG.UN TSX)
Then: $11.16; Now: $10.64 -4.62%; Total return: +2.80%
Kinross Gold (K TSX)
Then: $8.04; Now: $4.12 -48.76%; Total return: -48.76%
Total return average: +0.40%
"Now" figures are intraday from the date of the analyst's appearance on BNN Market Call.
Markets continue to grind higher on optimistic economic forecasts and fairly good earnings growth. Markets have had a good run as investors have put a higher valuation on future earnings growth. For the pace of returns to keep up with past results, earnings are going to have to accelerate at a very rapid rate which seems unlikely given modest economic growth and already high profit margins. Investors are probably best advised to look for more modest returns in the future and maintain good cash balances to capitalize upon any weakness that may develop over the quiet summer season.