Hap Sneddon is the portfolio manager and technical analyst for CastleMoore Inc. His focus is on technical analysis.
This US/UK regulated and non-regulated utility holding company offers a discount to peers in the sector, a stable income stream, and recently it broke a price downtrend. Post QE announcement the stock has strengthened outperforming the utility sector and the S&P 500.
Husky ranks very high for money flow and relative strength against the components of the TSX. Too, this stock which underperformed its peers over the last 5 years, has been significantly bettering the TSX Energy Index. Husky has been building towards more of a growth profile with its Liwan and Madura nat gas, and Sunrise oil sands project while paying its investors 4 per cent+ dividend.
First Quantum Minerals
First Quantum should be a net beneficiary of continued global stimulus. For us it’s a toe in the water, as we have little pure commodity or “risk-on” exposure. The stock offers investors decent management, growth potential and a strong asset profile. It too is stronger than the TSX but on a shorter term basis. The risk-to-reward is decent at the current price with upside return potential of +20.
Past picks: Nov. 15, 2011
The Jean Coutu Group
Total return: +16.22 per cent
TR: +15.34 per cent
Total return: +16 per cent
Total Return Average: +15.85 per cent
The markets have not initially responded positively post-QEternity. The previous three announcements – QE1, QE2, and Operation Twist all displayed strong upside moves across the broad equity spectrum, and a slump in long bonds and the U.S. dollar a month later. This time around the peak of the market (in anticipation) was Sept. 13, the day of the announcement, while both bonds and the U.S. dollar strengthened in the interim. Above the confusion and the weight of all the macro data, a prudent course for portfolio management until things break one way or another is a balance between “risk on” and “risk off” assets. Some significant divergences are apparent including the weakness of Dow Jones Transports, the Russell 2000 and strength or lack of plunge in the U.S. dollar and government long bonds.
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