Don Lato is president of Padlock Investment Management.
With crop prices being driven higher due to the North American drought, second-half demand in international markets should allow Agrium to build on its excellent first-half results. The $900-million Dutch auction scheduled for October should also be accretive to earnings.
Canadian Natural Resources
After being one of the poorest performing oil and gas stocks in the first half of the year, Canadian Natural’s relative valuation provides for significant upside in the second half. The recently announced strong second-quarter results eased investors’ concerns over production problems at its Horizon project.
In its first year as a public company, Poseidon has rewarded its shareholders through capital appreciation and its 7.5-per-cent dividend yield. Continued growth of fracking technology should allow Poseidon to capitalize on its excellent reputation to continue to grow its earnings.
Past Picks: Aug. 15, 2011
Total return: +64.39%
Total return: +6.51%
Total return: +17.74%
Total Return Average: +29.55%
Markets have enjoyed strong rallies from their early June lows that could be running out of steam in the short term. Investors should be more selective and continue to focus on companies with growing earnings and still reasonable valuations, of which there are a great number of good companies to choose from. Favourable monetary conditions and low historical valuations will continue to provide strong tailwinds and buffer any declines.
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