Fabrice Taylor.Jimmy Jeong/The Globe and Mail
Fabrice Taylor, CFA, publishes the President's Club investment letter. His letter and The Globe and Mail have a distribution agreement.
Top Picks:
Patient Home Monitoring
PHM is consolidating the home monitoring industry in the U.S., where an aging population and government deficits are forcing the government to encourage hospitals to send patients home and monitor their own conditions. Technology is making this possible. There are 10,000 small home monitoring businesses, typically regional and focusing on one ailment. PHM is consolidating these small enterprises with the idea of cross-selling services to new patients they add.
Xerox
The transition from copier/printing company, which is a low-margin business, to an IT services concern looks to be working out. While the legacy business continues to slowly shrink, the services business they acquired a few years ago is offsetting this and perhaps growing. The company is paying off debt as it generates cash and the multiple is slowly rising as a result.
Cemex
One of the biggest cement companies in the world, Cemex was hurt by the financial crisis in two ways: business dried up plus it had piled on debt. Business is slowly improving, and the debt is more manageable but still high. If things improve, the debt leverage will magnify investor returns.
Past Picks: May 25, 2012
BCE
Then: $40.46
Now: $44.45
Total return: +17.20 per cent
The Brick Taken over April 1, 2013
Then: $3.90
Now: $5.40
Total return: +39.19 per cent
Athabasca Minerals
Then: $0.60
Now: $1.03
Total return: +71.67 per cent
Total return average: +42.67 per cent
Market outlook:
The U.S. is slowly recovering, but it seems lumpy. The energy revolution in shale should create jobs, in the energy sector but also in manufacturing, as low gas prices stoke a revival in that sector. Stocks should keep climbing. Interest rates are rising but not likely a lot. Rates should stay low by historical standards for some time. Manufacturing should rebound in Canada too, given gas prices and a low dollar. Commodities are probably going to stay weak for a while. Regardless of the market's direction, there are always stocks going up.