StoneCastle's Bruce Campbell
Bruce Campbell is president and portfolio manager of StoneCastle Investment Management. His focus is Canadian equities.
Top Picks:
Grande West Transportation (BUS-X)
This company designs, builds and sells buses for mass transit in the mid-size category. The buses they manufacture are heavy-duty, reliable and more efficient for the operators. The company is just on the cusp of turning cash flow and earnings positive. Company management has released scenario analysis that sees a range of EPS for 2017 of 4 cents to 24 cents per share. The last purchase was 98 cents.
goeasy Ltd. (GSY-T)
goeasy provides alternative financial solutions through two divisions, their financial and their leasing side. The high-growth element of the business is the financial side, where they provide consumer loans from $1,500 to $15,000 in value. The company has been growing net income at over 20 per cent compounded per year since 2001. The last purchase was $24.25
Tidewater Midstream and Infrastructure (TWM-X)
Tidewater provides natural gas liquid storage, processing, transportation and sales services. They focus on three core areas, the Deep Basin, Montney and Edmonton. The company's goal is to be a high-growth midstream company while providing stable cash flows. The stock currently trades at half the value of peer companies. The last purchase was at $1.50.
Past Picks: Oct. 21, 2015
GuestLogix (GXI-T)
Then: $0.42 Now: $0.095 -77.65% Total return: -77.65%
Inspira Financial (LND-X)
Then: $0.11 Now: $0.35 -64.13% Total returnR: -63.68%
Kinaxis (KXS-T)
Then: $38.51 Now: $63.63 65.23% Total return: 65.23%
Total Return Average: -25.37%
Market outlook:
We continue to be constructive on the markets. During the year, we have seen the top-down economic and market indicators that we follow continue to improve. We entered the year on defence and then moved to offence in March. Since moving to offence we have seen participation in the markets broaden out. We now see that many of the traditional growth areas are once again beginning to outperform, as investors are more optimistic about earnings growth at the same time as they have focused more on growth over value.
During the most recent short term, we have seen the markets go through a period of consolidation where there was not much price performance, positive or negative. We are heading into the strongest period, historically, from November to May. Investors should monitor the top-down market and economic indicators, and — if they continue to stay positive — remain on offence. The shorter term has improved, and we're watching for the longer-term indicators to show reacceleration.
One item for investors to watch is that, historically, post-U.S. election years have had an unpleasant statistic. Nine of 14 economic recessions began in the years following a U.S. election. While you cannot invest based on this historically, it does require you to be on higher alert when following the top down indicators.
We will continue to monitor the top-down indicators for any changes. As of right now, we are on offence with our portfolios. If we see those indicators change, investors will want to adjust their portfolios to build a more defensive posture.