Mike Newton is director of wealth management and portfolio manager at Scotia Wealth Management. His focus is North American large caps and ETFs.
Top Picks:
Home Depot (HD.N)
Last purchased on November 19th at $127.50 U.S.
Home Depot continues to execute very well, consistently delivering better-than-expected results in a challenging retail environment. The housing market remains robust, which is increasing customers' willingness to take on more discretionary home improvement projects. The housing market in the U.S. will remain on a positive trajectory and that spending on home improvement will continue to be a bright spot supported by low gasoline prices and positive consumer confidence.
Luxottica Group (LUX.N)
Last purchased on November 11th, 2015 at $69 U.S.
Luxottica is the largest eyeglass frame maker in the world, with 6,500 retail stores around the world. They own LensCrafters, Pearle Vision, and Sunglass Hut, as well as optical kiosks in Target and Sears. Luxottica produces eyewear through its house brands of Ray-Ban, Oakley, Persol, Oliver Peoples and through licenced brands we all know. The obvious part of the story is demographic in nature and the simple fact is that our eyesight gets worse as we age. But the interesting catalysts which may prove to be surprising is the fact they are the exclusive supplier of Google Glass, and they have partnered with Intel and Oakley to create a smart eyewear line-up.
Vanguard FTSE Developed Europe All Cap Index ETF (VE.TO)
Last purchased on November 23rd at $26.73
I expect euro zone equities will begin to receive some marginal proceeds from profit-taking in the U.S. markets. Unlike the U.S., where wage growth is expected to accelerate and profit margins look stretched, there is room for profit margins to rise in the euro zone, given the stage of the domestic profit cycle there. Additionally, euro zone equities look attractively valued.
Past Picks: December 16, 2014
Canadian National Railway (CNR.TO)
Then: $76.59 ; Now: $73.77; Return: -3.68% ; Total return: -2.07%
Tesla Motors (TSLA.O)
Then: $197.81; Now: $224.52 ; Return: +13.50% ; Total return: +13.50%
Starbucks (SBUX.O)
Then: $79.13; Now: $61.18; Return: +54.63% ; Total return: +56.63%
Total Return Average: +22.69%
Market outlook:
It is at this time of the year when I go on a strict diet of avoiding the bountiful "Outlook / Forecast / 2016 Top Picks" buffets offered everywhere you look. No one ever has a precise view on where we are going to finish and when. The turning of the calendar from one year to the next has zero influence on great companies. Long term investors should bypass this market timing discussion and stay long superb companies with positive trends. In my world, price is the ultimate arbiter of truth. So until the current consensus trades start failing, stay with them. And when they begin to falter, have a playbook for the next non-consensus trade and reposition accordingly.