Lorne Steinberg is president and portfolio manager of Lorne Steinberg Wealth Management Inc. His focus is on value stocks and high-yield bonds.
Top Picks:
Morgan Stanley
Morgan Stanley transformed its business model after the financial crisis. It now boasts a stronger balance sheet than most of its peers, and it is focused on businesses that require less risk taking. Earnings have rebounded nicely and the company is back on a growth trajectory. The company is still being punished for past sins and the valuation is ridiculously cheap, trading at less than tangible book value.
Sun Life
Sun Life is among the most conservatively run companies in its industry. It never had to raise capital or cut its dividend during the financial crisis. It is well capitalized, solidly profitable, and global in scale. Besides its well-respected North American operations, it is the largest foreign insurer in India. Low interest rates are causing some pain, but earnings should rebound sharply this year to over $2.50 per share. With a 7% dividend yield, these shares offer plenty of upside.
Nippon Antenna (Listed in Japan)
This is another great niche Japanese engineering company that makes specialty antennas for a wide variety of applications. The shares are so cheap that this debt free company is actually trading for less than its net cash! It is over 50 years old, solidly profitable, trades at 7 times earnings and pays a 3.4% dividend.
Past Picks: March 25, 2011
Cash
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Novartis
Then: $55.43
Now: $56.14
Total return: +1.26%
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Sanyo Engineering (listed in Japan)
Then: ¥339.00
Now: ¥280.00
Total return: -14.88%
Total Return Average: -4.54%
OUTLOOK
Despite the recession in Europe, and sluggish growth elsewhere, the market decline last year has provided us with a number of very attractive opportunities to buy strong businesses at very depressed prices. We are getting very high dividend yields and the opportunity for significant capital appreciation. We are seeing great values in Japan, the U.S. and Europe and expect the Canadian market to underperform in 2012.
Compiled by Franklin Cameron, BNN Market Call Tonight
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