Hap Sneddon is portfolio manager and technical analyst at CastleMoore Inc. His focus is on technical analysis and macro portfolio strategies.
George Weston Ltd.
George Weston ranks very well against the rest of the TSX60, its baking division is rising nicely, and Loblaw Cos. Ltd.’s management is executing well. The recent announcement by Loblaw to unlock its real estate value is positive, as is the parent company’s almost $1.5-billion war chest.
This U.S.-U.K. regulated and non-regulated utility holding company offers a slight discount to peers in the sector, a stable income stream, and the stock recently broke out of a price congestion area between $27 and $30. Utility companies are beginning to screen well against the broad market. PPL stock has a current yield of 4.75 per cent and an upside target in the mid 40s, with downside risk to $28.25.
The separation from Abbott Laboratories allows investors in AbbVie to focus with greater intensity on its core products, led by Humira, and its pipeline of compounds in Phase 2 and Phase 3 to address solutions in neuroscience, renal care, immunology, and oncology. Hepatitis C, multiple sclerosis, and Alzheimer’s are particular areas of progress. In addition to a decent yield of 4.3 per cent, and potential growth from emerging markets, pharmaceuticals are in a nascent secular bull market.
Past picks: Feb. 25, 2012
iShares TSX Capped Energy Index
Total return: –11.73 per cent
Husky Energy Inc.
Total return: +24.31 per cent
iShares Dex Long Term Bond Fund
Total return: +4.83 per cent
Total return average: +5.80 per cent
Equity indexes have been in a broad topping range for a couple of weeks now, finding stiff resistance at previous highs in 2000 and 2007. Any recent upside moves in stocks have been a result of short covering. The softness of the Canadian dollar, strength in the U.S. dollar and the failure of the U.S. 10-year Treasury to break up through 2.10 per cent to 2.15 per cent confirms the recent sputtering of global manufacturing.
Short-term equity markets are oversold and expected to bounce. Longer term, portfolios will be best served by sectors exhibiting secular strength such as health care, biotech and pharmaceuticals, and ones presenting stable income and growth, such as consumer staples and utilities. Too, the recent reversal in government bonds suggest a decent opportunity to be long the 10-year over the next 18 months.