David Baskin is president of Baskin Financial Services. His focus is on North American large caps.
The firm owns this for clients; I own it; the family owns it. We are currently buying at market. Apple has sold off by over 30 per cent for no particular reason. Trading at 14 times trailing earnings, with cash on the balance sheet and a dividend yield of about 2 per cent, Apple is now a value play. The company does not have to grow at much more than 15 per cent per year to justify a $600 stock price. Apple TV, when it arrives, could be a game changer for the entire entertainment industry, and this is not valued at all in the stock.
Empire Co. Ltd.
We are currently buying at market. The Sobey family holding company has an estimated net asset value of $75 to $80 per share but the stock trades at under $60. This is a classic value situation in which rising dividends, a healthy balance sheet and undervalued assets will eventually lead to a nice increase in share prices.
SNC-Lavalin Group Inc.
We are currently buying at market. The company has cleaned house, has a new CEO and, soon, new board members. In the meantime, it continues to win new contracts in Canada and elsewhere and has a record backlog of more than $10-billion. When the headlines disappear the stock price will rise back to the $50-plus level last seen in 2011.
Past picks: Dec. 19, 2011
National Bank of Canada
Total return: +14.50 per cent
Suncor Energy Inc.
Total return: +18.50 per cent
Teck Resources Ltd.
Total return: +6.44 per cent
Total return average: +13.15 per cent
Assuming a reasonable budget deal in the U.S., we expect to see moderate growth in the North American economies in 2013. Low interest rates will continue to drive investors toward the reliable cash flow generators such as telecommunications, pipelines, utilities and REITS, but increasing economic activity bodes well for more cyclical sectors such as retail, consumer durables and materials. The positive progress on the pipeline approval process that we hope to see would make Canadian oil sands-related companies big winners. Canadian investors should take advantage of their strong dollar to buy U.S. technology, pharmaceutical and health care stocks at bargain prices.