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Alex RuusTibor Kolley/The Globe and Mail

Alex Ruus is portfolio manager at Arrow Capital Management. His focus is North American equities.

Top Picks:

Alaris Royalty (AD.TO)

Last purchased Sept. 21 at $29.23/share

Alaris is a leading alternative financier to non-resource companies. The company has excellent management, a conservative balance sheet, and an excellent track record of building value and increasing dividends since its inception. We own it and believe the stock is undervalued at 15 times earnings and 5.6 per cent dividend yield.

Magna International (MG.TO)

Last purchased Sept. 21 at $65.79/share

Magna is the world's third-largest independent auto parts supplier. It is an innovative global leader in several key auto parts segments, led by a strong management team, with a demonstrated record of shareholder value creation. The company is steadily building shareholder value and returns value through a rising dividend accompanied by numerous share buybacks. We own the company and and believe it is undervalued trading at 8 times earnings and a 1.8 per cent dividend yield.

Microsoft (MSFT.O)

Last purchased Sept. 21 at $44.06/share

Microsoft is the world's largest software company and an emerging leader in commercial cloud services. The market is undervaluing this leader which has significant growth potential driven by the commercial cloud and its move to subscription and recurring revenues. The stock is undervalued, trading at 11 times earnings and a 3.3 per cent dividend yield.

Past Picks: September 10, 2014

Anthem (ANTM.O)

Then: $119.80 Now: $149.57 +24.85% Total return: 6.84%

Gilead Sciences (GILD.O)

Then: $108.22 Now: $105.74 -2.29% Total return: -1.55%

Neptune Technologies & Bioressources (NTB.TO)

Then: $2.17 Now: $1.58 -27.19% Total return: -27.19%

Total Return Average: -0.63%

Market outlook:

Look for the markets to be volatile near-term as current weakness in China causes general market angst. While growth in China looks to be weak over the coming year, the U.S. economy, the world's largest, looks to be moving forward solidly. This should keep the slow global recovery out of the great recession on track for yet another year of slow growth. The massive pullback in the price of oil is serving as a stimulus for global consumers, which should support consumer spending. With the backdrop of a slow growth economy and divergent valuations in the stock market, there are excellent investing opportunities, but generating good returns will be very dependent on stock picking. The fundamentals of the companies in the Leaders portfolio are extremely strong and are outperforming the broader market with their superior leading positions.

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