Darren Sissons is managing director at Portfolio Management Corp. His focus is on global equities.
The company has a 4.7-per-cent dividend yield and a good balance sheet. It is attractively priced due to its Gulf of Mexico oil spill liability, which is well provisioned and likely be finalized by year end. The majority of the BP-TNK (Russian) joint venture proceeds were rolled into OAO Rosneft, which continues its profitable exposure to Russian oil reserves. The balance of the TNK sale proceeds will support a share buyback program. The portfolio is being re-jigged to focus on high-impact exploration.
Kuehne & Nagel International AG
This offers a 3.5-per-cent dividend yield, a very strong balance sheet, and is at the lower end of its historical valuation range. It is tied to global GDP since it is involved in the movement of products across international borders: The company has historically grown revenue between 1.5 and 3 times global GDP. The founding family, which effectively controls the company and is still a large shareholder, remains actively involved in the business and is targeting long-term, sustainable growth.
MTR (Mass Transit Railway, Hong Kong)
Offers a progressive 2.6-per-cent dividend yield, strong balance sheet, and is at the lower end of its historical trading range. Its growing subway operations in Hong Kong will drive earnings forward, while other earnings drivers include multi-year subway management contracts in Australia, China, Sweden and the U.K., along with property management at owned subways and the development of new subway locations on company sites.
Past picks: April 12, 2012
Wm Morrison Supermarkets PLC
Then: Gbp 291.40
Now: Gbp 284.00
Total return: +1.36 per cent
Total return: +3.58 per cent
Air Products & Chemicals Inc.
Total return: –1.26 per cent
Total return average: +1.23 per cent
The markets started well this year as they typically always do. The run won’t last and it will likely lose steam now that the RRSP/401K seasons have ended.
The U.S. economy will continue to strengthen but news headlines and a poor political environment will support continued U.S. market volatility.
Europe is now taking the medicine required to fix its ailing economy. Banks must be recapitalized, austerity programs have been introduced and taxes will rise so companies with large euro zone exposure will see a decline in earnings over the near term.
Growth will continue across Asia but will be flat or modestly positive as the region’s major trading partners are either recovering from or declining into recession.
Canada is likely to see flat to lower commodity prices but this weakness will be somewhat offset by opportunities created by a continuing U.S. recovery.
Latin America is growing but inflation and government interference are still major problems.