Fabrice Taylor.Jimmy Jeong/The Globe and Mail
Fabrice Taylor, CFA, publishes the President's Club investment letter. His letter and The Globe and Mail have a distribution agreement.
Top picks:
American International Group Inc.
AIG is trading at a big discount to book value, and the book is very liquid. There was lots of bad taste from this one because it got caught up in the financial crisis and cost investors a lot of money. U.S. government has sold its stake, but given that ownership I think the company's on the straight and narrow. The discount to book should close, providing investors with a good return from a big-cap firm.
Quebecor Inc.
The wireless business should be profitable this year and that should get the stock moving. Otherwise it's a stable business with cable interests. There's scope for a higher dividend over time, too, as capital expenditures decline.
Nordex Explosives Ltd.
As the name implies, the company makes explosives at a plant in northern Ontario. It has a unique, bulk emulsion product that's far superior to stick dynamite – it's pumped into drill holes and is much more effective. The company supplies a large number of gold mines in northern Ontario but raised $4.5-million in November to expand into Quebec for gold. It's also diversifying west, into other commodities and to tap the quarries, construction and pipeline markets. This is a classic pickaxe story – don't buy the commodity producers, buy those that supply them.
Past picks: April 13, 2012
Symbility Solutions Inc.
Then: $0.50
Now: $0.53
Total return: +6 per cent
Alaris Royalty Corp.
Then: $18.85
Now: $27.51
Total return: +52.6 per cent
Temple Hotels Inc.
Then: $5.83
Now: $5.86
Total return: +7.8 per cent
Total return average: +22.13 per cent
Market outlook:
Canadian resource stocks will stay under pressure; there is too much value destruction in mining. Oil and gas are in for some near- to mid-term pain until pipeline issues are solved. U.S. financials could lead the way to a continued rise in American markets. As always, look to smaller players for growth opportunities.