Norman Levine.Fred Lum/The Globe and Mail
Norman Levine is managing director of Portfolio Management Corp. His focus is North American large caps.
Top Picks:
Wright Medical (WMGI-NASDAQ)
Wright is a manufacturer of specialty orthopedic implants and instrumentation. Wright's product offerings include extremity implants for the foot, ankle, hand, elbow, and shoulder. They are the market leader in foot and ankle. Sales growth has been strong due to new product initiatives and gross margins and earnings are benefiting from supply chain and pricing initiatives. The CEO has a history of turning around and selling companies he runs.
Talisman Energy (TLM-TSX)
Oil and natural gas stocks have rallied in recent weeks but shares of Talisman have lagged. Talisman is a major producer of both commodities. We believe investors are in a show-me mode with the company as they await word on further asset sales or even sale of the company. We believe this provides an opportunity for astute, patient investors as the stock sells at a large discount to comparable companies and we do not expect that to stay that way forever. Investors also get to collect a 2.5-per-cent yield.
Tsingtao Brewery (0168.HK or TSGTF pink sheets)
Tsingtao is the largest brewery in the world and the market leader in China. It is leveraged to the increasing wealth of the Chinese market and is actively consolidating the brewing business in China. It recently signed joint venture agreements with Asahi (20-per-cent shareholder in Tsingtao) and more importantly Suntory. Good crop yields for barley in 2013 imply lower brewing costs in 2014, which should positively impact earnings. Selloff in emerging market equities has provided an excellent entry point.
Disclosure: | Personal | Family | Portfolio/Fund |
WMGI | Y | Y | Y |
TLM | Y | Y | Y |
0168 | Y | Y | Y |
Past Picks: April 10, 2013
Callaway Golf (ELY NYSE)
PAST COMMENTARY: We like Callaway as a turnaround story. A new CEO with lots of golf business experience (ex-CEO of Adams Golf) is making major changes in Callaway's product offering, manufacturing footprint, and balance sheet. Turnarounds take time but we believe he is doing the right things.
Then: $7.03; Now: $8.92 +26.88%; Total return: +27.58%
BankUnited (BKU NYSE)
PAST COMMENTARY: In a former life, BankUnited was a failed Florida bank that collapsed during the housing bubble. Now scrubbed clean with substantial excess capital, the bank is Florida's second biggest by deposits and has $12.4-billion (U.S.) in assets. The bank is run by John Kansas of North Fork Bank fame. It is a long-term growth (New York and Florida) and interest rate story. The current 3.4-per-cent yield is secure.
Then: $25.64; Now: $32.78 +27.85%; Total return: +31.38%
Kuehne + Nagel Int'l (KNIN-VX)
PAST COMMENTARY: Trades on the SIX Swiss Exchange (VX). Bought on April 4 at 102.3 Swiss Francs. Kuehne + Nagel is the leading global logistics company incorporating sea freight, air freight, road & rail logistics, contract logistics, real estate, and insurance brokerage. The logistics industry is a defensive sector with attractive growth characteristics. Its shares are attractively priced due to the recent selloff of European equities. It has a strong balance sheet and a 3.5-per-cent yield. We expect to benefit from the growth in import/export trade volumes between developed economies; amongst emerging and developing economies; and amongst high growth emerging economies.
Then: CHF$105.80; Now: CHF$120.70 +14.08%; Total return: +17.80%
Total return average: +25.59%
Disclosure: | Personal | Family | Portfolio/Fund |
ELY | Y | Y | Y |
BKU | Y | Y | Y |
KNIN | Y | Y | Y |
Market outlook:
We remain long-term equity bulls as we feel the slow and steady recovery of world economies will continue. Although we would prefer to see economic growth stronger and more consistent, we are happy with the trend.
A silver lining for equity investors: In addition to Canadian exporters seeing potential growth thanks to the discounted Canadian dollar, the loonie's rapid depreciation is already providing a boost to non-Canadian equity market returns, as stocks priced in U.S. dollars continue to appreciate. The weaker Canadian dollar is also giving investors in non-Canadian dividend-growing companies some value-add.
That said, we continue to expect a market correction. We would view a correction as healthy as it would take out some of the markets' froth and provide better buying opportunities for us as we have a cash reserve we would like to spend at the right valuation level.