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financial compass

As recent events have shown, investors face a distinct correlation between international turmoil and global equity markets.

With stability the goal, we asked three advisers to recommend stocks that should hold up over the longer term – say, three to five years. Here are the equities they chose – in no particular order – along with their reasons for choosing them. (Experts warn, as always, that investors need to make their own decisions about what will best fit into their portfolios, given their unique life circumstances and other factors.)

Sylvain Brisebois, regional manager and investment adviser, BMO Nesbitt Burns Inc., Ottawa:

Boeing Co.: The aircraft manufacturer is a high quality company with about a nine-year backlog in commercial orders, indicating very strong demand. The Chicago-based company has also experienced strong dividend growth in recent years. “What we like about Boeing is that no other industrial company in our mind has so much visibility,” Mr. Brisebois says.

Canadian National Railway Co.: “The strong housing and automotive recovery [is] good for transport stocks, and there continues to be a shift from road to rail, which benefits all railroads in North America,” he says. Montreal-based CN offers the largest rail line of any Canadian company, and it will be able to take advantage of the pickup in demand, he adds.

Bank of America Corp.: A strong U.S. economy and healthy housing and manufacturing sectors bode well for North Carolina-based Bank of America. This stock could very well increase its dividend and gain consumer confidence, says Mr. Brisebois.

Wells Fargo & Co.: This San Francisco-based firm is one of the strongest mortgage companies in the United States. They came out of the financial crisis in good shape and continue to be a well capitalized business, Mr. Brisebois says; their earnings track record is very stable, and they are at near record profitability.

Aetna Inc.: “When you’ve got strong employment, more people need health-care benefits through their work,” he says. This U.S. company based in Hartford, Conn., offers a range of insurance, “so the health-care reform is also positive for them,” he says.

Stan Wong, director of wealth management and a portfolio manager, ScotiaMcLeod, Toronto:

Facebook Inc.: “Facebook has very strong and considerable competitive advantages in the social media space, given its strong global branding, its growing user base and very high levels of engagement, and considerable access to powerful user data,” Mr. Wong says. He is also bullish on Palo Alto, Calif.-based Facebook because the company is building strong franchises for its Messenger instant-messaging services as well as for its subsidiaries Instagram and WhatsApp.

Walt Disney Co.: “Disney is arguably the world’s most dominant entertainment and media conglomerate, with diversified operations in theme parks, film and entertainment, television and consumer products,” he says of the California-based company. “Because they have that breadth and that multi-platform approach, to me it gives the company a very distinctive competitive advantage over other media companies.”

Starbucks Corp.: This Seattle-based company is the world’s leading coffee retailer with more than 22,000 stores in 67 countries. “It is the premier large-cap growth name within its space. They’ll continue to have store expansions internationally, which will drive growth. Because they have that strong customer loyalty, people line up for Starbucks,” he adds.

Celgene Corp.: An aging population across North America will bode well for New Jersey-based Celgene, a biopharmaceutical company focused on the development and commercialization of drugs for the treatment of cancer and other illnesses, Mr. Wong says. They have also experienced strong market share retention and growth, he added.

Dollarama Inc.: Canada’s largest dollar-store retailer “is a very attractive, very growing segment of the Canadian retail space. They plan to grow to over 1,400 locations from the approximately 900 today,” he says. The Montreal-based company also benefits from “extremely strong management and strategic thinking.”

Craig Fehr, investment strategist, Edward Jones, St. Louis, Mo.:

Rogers Communications Inc.: “I think a lot of Rogers’ strength comes from its diversification and its leadership position,” Mr. Fehr says of the Toronto-based media, cable and telecommunications company. “It’s number one in wireless in Canada, number one in cable TV. You want to be levered, in my opinion, to the companies that are exposed to the higher growth components of the industry. Wireless is really the attractive one there, so that’s the key area for Rogers for me,” Mr. Fehr says.

Lowe’s Cos. Inc.: The North Carolina-based home improvement retailer is undertaking a strategy to improve profitability. Growth has been compelling, in large part due to the U.S. housing market, which has been experiencing tailwinds that are contributing to a resurgence in home values. “As folks see the value of their home going up, they’re more inclined to perhaps stay in that home, and then maybe even add improvements to it,” Mr. Fehr says.

Mondelez International Inc.: Illinois-based Mondelez has strong global brands for snack foods, such as Cadbury, Trident, Nabisco and Toblerone, and also has a strong international presence, with 80 per cent of its sales coming from outside North America, Mr. Fehr says. “Over the long term … the greater exposure you have to a rising middle class and a change in consumer spending habits in some of these emerging markets, and even some of the developed markets around the world – that’s the growth platform for this company.”

Suncor Energy Inc.: “Suncor has an exceptionally strong financial position, which means that it’s not going to come under a tremendous amount of short-term duress if oil prices stay low for a while, which I think they will,” Mr. Fehr says. “The attractive component here is they have the financial position to weather the storm, and the properties to be able to grow revenues at an attractive pace,” he adds of the Calgary firm.

Potash Corp. of Saskatchewan Inc.: While commodity price declines have produced a lot of pressure on the energy and materials sectors, Saskatoon-based Potash is tied to something much bigger – the need to feed a growing international middle class. “They have a very strong foothold in the agricultural space, particularly in fertilizers. So if you think about feeding more mouths around the world, and the need to extract more yield from every acre of land, Potash is very well positioned. They’re the leaders in fertilizers,” Mr. Fehr says.