Michael Smedley.Fred Lum/The Globe and Mail
Michael Smedley is executive vice-president and chief investment officer, Morgan Meighen & Associates. His focus is Canadian equities.
Top Picks:
Spin Master (TOY.TO)
A newcomer to the stock market is the latest and in my opinion the most differentiated toy company to reach the mighty juvenile consumer market. Founded 20 years ago by three guys in university, it is now a $900-million revenues company. It has a roster of external toy creators and is the go-to name for Disney level companies that need a character. The company is very "growthy".
Lululemon (LULU.O)
Keeping consumer stocks in the list – this company recently gave us one of its entry points when the big numbers showed growth while margins were a bit squeezed and the quarter's announcement exuded a bit of caution. The vultures slammed what I think has great unmatched style and the most undeveloped set of locations of any world class brand name.
Middleby Corp (MIDD.N)
American not Canadian and I must have used it before as a top pick. It is presently 9 per cent of the portfolio of the Smedley Special Opportunities Fund, long the top holding. It is the biggest supplier of environmentally conscious kitchen equipment for the world's top restaurant chains, all American, of course. The unrealized gain is over 400 per cent and the holding has been sold down a couple of times in a couple of years.
Past Picks: August 6, 2014
easyhome (EH.TO)
Then: $23.80; Now: $14.96; -37.14%; Total return: -36.03%
Mitel Networks (MITL.O)
Then: $10.44; Now: $7.01; -32.85%; Total return: -32.85%
Gear Energy (GXE.TO)
Then: $5.46; Now: $0.99; -81.87%; Total return: -81.87%
Total Return Average: -50.25%
Market outlook:
As we get closer to the end of lazy summer days the bear market conditions that have taken down almost everything on the board might turn on more than the present scattered buying action. However, I have no doubt that the big and impatient money that seems to drive much of today's price volatility will continue its heavy influence on even the slightest of negative news about a company. It is as if everything is supposed to be perfect all of the time. I would however caution that the market could be somewhat sidelined by global events for a while. Not least of these are the pretense of the Fed that "quantitative ease" – to modify the jargon – can be replaced by rate-raising and that notoriously inaccurate jobs numbers are strong. And, far from North America is the mass immigration event gripping Europe, the big northward advance now underway. We are in a world of change that demands more attention than markets and I expect little overall improvement through the rest of this year.