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Three top stock picks from ScotiaMcLeod’s Greg Newman

Greg Newman is director and associate portfolio manager of the Newman Group, ScotiaMcLeod. His focus is on Canadian dividend stocks and protection strategies.

Top Picks:

Baytex Energy Corp.

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We believe the proposed purchase of Aurora Oil & Gas Ltd. will drive cash flow accretion, margin expansion and further dividend growth. Buy Baytex while there is uncertainty surrounding closing which we believe is probable and enjoy a sustainable 6.3-per-cent dividend.

Vanguard FTSE Europe ETF

Europe is emerging from recession and their stocks trade at a wide discount to the U.S. Benefit from the catch up and enjoy a 2.75-per-cent dividend along the way.

Bank of America

Benefit from the trend of rising loan growth, higher deposits, firmer net interest margins, lower expenses and stock buy backs while this world class name still trades just over its tangible book value

Past Picks: April 10, 2013

Peyto Exploration

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PAST COMMENTARY: Peyto sets the bar in low costs and enjoys enviable production growth. With an improving balance sheet and dividend coverage, it is a great way to benefit from higher natural gas prices which appear likely.

Then: $28.19
Now: $36.03, +27.81%
Total return: +31.42%

Baytex Energy Corp.

PAST COMMENTARY: Baytex is an excellent operator, pays over a 6-per-cent dividend and should benefit from heavy oil continuing to trade closer to global prices.

Then: $41.71
Now: $43.98, +5.44%
Total return: +11.85%

Suncor Energy Inc.

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PAST COMMENTARY: Suncor's stock has been weak for different reasons which are more than likely discounted at present levels. With a healthy balance sheet and $1-$2 per year in free cash flow, it should have upside and dividend growth from these levels.

Then: $30.12
Now: $36.41, +20.88%
Total return: +23.78%

Total Return Average: +22.35%

"Now" figures are intraday from the date of the analyst's appearance on BNN Market Call.

Market outlook:

Spotty economic data out of China and the U.S., along with geopolitical tensions, will ultimately provide, I believe, yet another buying opportunity for this five-year-old bull market. As of Q4, U.S. household net worth is now at a record $80.6-trillion (U.S.), $11.8-trillion above the last peak of $68.8-trillion in Q2, 2007. This, along with a recovery in Europe, continued central bank accommodation and constructive policy in China, I will believe will propel markets further. Buy dividend stocks that can outperform in this environment.

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