Gordon Reid is president and CEO of Goodreid Investment Counsel. His focus is on U.S. equities.
As a premier global investment banking franchise, GS is biding its time until the pent-up demand of capital markets business breaks out. Goldman trades close to book value, well below valuation levels when capital markets are active.
Time Warner’s growth engine is their digital platforms, which will capture the growing mobile market for film (Warner Bros.), television (HBO, CNN) and publishing (People, Time). With a valuation of 15x earnings, exciting growth opportunities, and strategic moves (Time Spin-off), this issue is excellent value.
Mueller’s business success is closely tied to construction activity and with the well-documented upswing in residential home building this company is well positioned. Valuations are reasonable and at this early stage of a housing recovery expect earnings to be robust for the next few years.
Past picks: July 25, 2012
Deere & Co.
Total return: +17.78 per cent
Total return: +39.91 per cent
Hornbeck Offshore Services
Total return: +38.67 per cent
Total return average: +32.12 per cent
While the market focus is on macro issues and monetary policy direction, Goodreid concentrates on owning companies that are improving on their own financial history and compare favourably to their peers, while at the same time offering attractive valuations.