Jim Huang is president of T.I.P. Wealth Manager Inc. His focus is on North American equities.
Top Picks:
Starbucks Corp.
Starbucks is a dominant coffee chain in North America and has extensive international operations. It has grown quickly since inception but still has lots of room to expand. Notably, most of its profits still come from the U.S., its home market, while the fastest growing division is China. Today, Starbucks actually makes little money in markets like Europe which offers upside if it can turn things around. It's also rolling out new bakery and juice offerings, expanding into the supermarket channel and opening up tea outfits. In other words, Starbucks is an innovator. It trades at high earnings multiple, and deservedly so.
Tricon Capital Group
Tricon is traditionally a North American real estate manager that offers its service to outside investors, as well as investing as a principal. Its timely entry into the U.S. residential housing leasing and development market brings the prospect of above-average return as the U.S. housing market continues to recover from the depth of the great real estate bust. Investors can look forward to future capital gains for this business as well as current leasing income as protection. Potential securitization of the lease income stream may lower funding costs and free up capital for further investments.
Equity Financial Holdings
Equity Financial is expanding quickly in the under-served Canadian alternative mortgage market. Armed with plenty of excess capital and guided by experienced executives from industry leaders, Equity Financial has built up a sizable business from the ground up over the last two years, and is poised to grow multiple times. Recent management turmoil should be resolved favourably in the near term, with the current share price creating an excellent entry point for investors.
Past Picks: March 7, 2013
Granite Real Estate
Then: $38.98; Now: $38.26; Total return: +3.43%
Tricon Capital Group
Then: $6.78; Now: $7.99; Total return: +21.96%
*Short* - Just Energy
Then: $7.83; Now: $8.28; Total return: -19.71%
Total return average:+1.89%
Market outlook:
Harsh weather and emerging market instabilities have caused a mini correction in the stock market. However, global economies continue their slow but steady recovery, with the U.S. leading the way. China has stabilized. Japan and Europe are showing signs of revival. Central banks around the world are focusing on keeping interests lower for longer in an attempt to stimulate growth, though reduction of treasury purchase in the U.S. may create near-term headwinds. We have seen money moving around to areas that have underperformed in the past year, which helps to create a more balanced market.