David Baskin is president of Baskin Financial Services.
Methanex (MX TSX)
The world’s leading producer of methanol is benefitting from two major trends: natural gas, the main input, is at very low prices; and demand for methanol, used in a wide range of industrial products and processes, is rising. Methenax has a modest p:e ratio of 14 time expected earnings and stellar return on equity of 26%, along with a growth rate of 19%. We are actively buying.
True North Apartment REIT (TN.UN TSX)
True North Apartments is a small but quickly growing REIT. The main attraction to us is the opportunity to invest alongside a proven entrepreneur who recently put significant personal capital in to the company. A high distribution of 8.52% is consistent with this higher than normal risk situation, which we think will become significantly larger over the next few years. We are actively buying.
Visa (V NYSE)
VISA is a company with tremendous stability and the benefit of a extremely well entrenched world-wide position. With a profit margin of 44%, a return on equity of 20% and a debt free balance sheet, VISA offers safety, a growing dividend and continued growth to conservative investors. The stock is about 10% off its high for the year, giving a good buying opportunity at this time. We are actively buying.
PAST PICKS: July 15, 2013
H&R REIT (HR.UN TSX)
Bank of Nova Scotia (BNS TSX)
BCE Inc. (BCE TSX)
Total Return Average: +20.54%
Recent improvements in the US employment market indicate that the economy there is now growing at a better rate. However, conditions are not so strong as to lead the Federal reserve to increase interest rates in 2014, and likely not in the first half of 2015. With fixed income offering very unattractive returns and corporate earnings continuing to grow, value stocks with strong fundamentals are still the best alternative for investors with a long time horizon. We do expect to see unsettled markets and a possible correction, but this should not deter purchasers of high quality equities.