Nick Majendie is a senior portfolio manager at Majendie Wealth Management at ScotiaMcLeod. His focus is on Canadian large caps.
Bonavista Energy Corp.
Bonavista's second-quarter production and cash flow were ahead of estimates and we expect that momentum to continue in the second half and into 2014. At the same time, BNP's valuation is at the cheaper end of its historical range.
Brookfield Office Properties
Investors have been overly focused on the short term challenge of leasing at Brookfield Place New York. This has resulted in the shares being at the lower end of their trading range. We are optimistic, however, on the longer term adjusted funds from operations growth prospects for BPO from its U.K. operations, three large-scale office developments in North America and ultimate releasing of BPNY, and we think the shares are good value currently.
Pembina Pipeline Corp.
Pembina Pipeline's operating results have been improving and, despite the company's obvious interest rate sensitivity, the company has excellent long-term growth prospects with over $3.5-billion of contracted infrastructure expansion. The recent 3.7-per-cent increase in the monthly dividend underlines the company's confidence in its growth outlook.
Past Picks: April 23, 2012
Total return: -11.43 per cent
Total return: +36.33 per cent
Brookfield Renewable Energy
Total return: +5.85 per cent
Total return average: +10.25 per cent
Nobody knows exactly how the unprecedented period of the last number of years of monetary ease by the world's major central banks will be unwound. One has to be concerned, however, that in the U.S, as an example, the S&P 500 has risen by 23 per cent over the last 10 months despite only modest growth in the U.S. economy and essentially flat earnings in the latest quarter. The risks of another bubble in equity markets that was apparent (at least in retrospect) in 2006/7 are self-evident. We do expect volatility to pick up in the short term and we think this particular cyclical bull market is likely in its latter innings, which means that investors should be increasingly cognizant of risk. The future direction of interest rates and of corporate metrics such as earnings, cash flow and book value as well as valuations will determine/influence the timing of the end of the bull market. Our specific one year targets for the TSX and the S&P 500 on this basis are 13,000 and 1,610.