Mike Newton is director of wealth management and portfolio manager at Scotia Wealth Management. His focus is North American large caps and ETFs.
Top Picks:
Newell Rubbermaid (NWL.N)
Most recently purchased last week at $36.70 USD
Shares of Newell Rubbermaid have slid 20 per cent since the company announced last month that it will buy Jarden. Newell Rubbermaid makes Rubbermaid containers, Sharpie markers, Graco strollers. Jarden operates several brands, including Sunbeam and Oster kitchen appliances, Rawlings baseball mitts and Yankee Candle. Management announced that the new entity (Newell Brands) would generate an incremental $500-million (U.S.) in cost synergies over four years, driven by scale and efficiencies. In addition, revenues are approximately 70-per-cent U.S. based.
Amazon.com (AMZN.O)
Most recently purchased last week at $573 USD
Revenue growth is accelerating, margins are expanding and the company's competitive moat is widening. Amazon already accounts for roughly 20 per cent of U.S. online retail sales, but the company's strong mobile positioning and infrastructure advantages should allow Amazon to continue to take share. After a strong year last year, this recent 18-per-cent drop offers an entry into shares.
Alimentation Couche-Tard (ATDb.TO)
Most recently purchased last week at $58.85 CAD
I have recommended this name on several occasions – this time around, principally because of its foreign revenue mix. With approximately 60 per cent of revenues from the U.S. and 30 per cent from Europe, the currency pick-up should continue to be beneficial, although not as large as in the past. In addition, I suspect they will continue to be an active consolidator although potential acquisitions.
Past Picks: January 27, 2015
First Asset Morningstar Canadian Value Index ETF (FXM.TO)
Then: $14.52 Now: $11.02 -24.10% Total return: -22.57%
Wynn Resorts (WYNN.O)
Then: $155.04 Now: $63.41 -59.10% Total return: -58.01%
Chicago Bridge & Iron (CBI.N)
Then: $39.00 Now: $35.81 -8.18% Total return: -7.61%
Total Return Average: -29.40%
Market outlook:
This is an environment where fundamentals get ignored and negatives are exaggerated – that is not an excuse but rather a reality that must be respected. Market mentality has reverted from "buy-the-dips" to "sell-the-rally" so far this year. The idea of a "growth-scare" is common in bull markets of this age. I fully recognize that there are a number of headwinds to global growth, but the global economy is still healing and U.S. expansion is expected to continue. Not until the strong oil correlation we are seeing breaks down will we see financial markets go back to trading on their own fundamentals again.