Paul Harris.
Paul Harris is partner and portfolio manager at Avenue Investment Management. His focus is North American and global equities.
Top Picks:
Qualcomm Inc. (QCOM-Nasdaq)
Qualcomm is the industry leader with dominant market share in a growing industry. It has a well-developed market road-map, generations ahead of its competitors. It has revenues and EPS growth of 10 per cent+ CAGR over the next five years. It has an attractive valuation at 13.9x eps plus a dividend of 2.3 per cent and a commitment to returning capital to shareholders. The issues with China are a buying opportunity.
Bank of America (BAC-NYSE)
Bank of America is one of the largest banks in the United States holding 10 per cent of all deposit in the country. The bank continues to restructure by selling of non-core assets and reducing cost through reduction in headcount. The company continues to improve its capital base. The stocks trades at .8 times book value and 11 times 2015 earnings. The company is buying back stock and will be increasing its dividend over the next several years from its present yield of 1.2 per cent.
Microsoft Corp. (MSFT-Nasdaq)
Microsoft has limited downside and good upside; we believe the risk/reward trade-off is compelling. We continue to see operational momentum improving with a raft of new products. The stock trades at 15 times earnings, has a 2.6-per-cent yield, has free cash flow of $27-billion (U.S.) a year, gross margins of 68 per cent and $85-billion in cash, and ex-cash the stock trades at 11x earnings.
Past Picks: December 27, 2013
** Note; returns are intra-day, not closing numbers**
Regions Financial (RF NYSE)
Then: $9.83; Now: $10.64 +8.24%; Total return: +10.12%
Leon's Furniture (LNF TSX)
Then: $13.55; Now: $17.90 +32.10%; Total return: +35.63%
TD Bank (TD TSX)
Then: $99.67; Now: $55.35 +11.07%; Total return: +15.00%
Total return average: +20.25%
Disclosure: | Personal | Family | Portfolio/Fund |
RF | Y | Y | Y |
LNF | Y | Y | Y |
TD | Y | Y | Y |
Market outlook:
Global stocks should continue their slow long-term "grind" higher due to low interest rates, high corporate probability and continued global GDP expansion. Bond yields will continue to stay low for the short and medium term as central banks withdraw monetary liquidity slowly. We think the opportunity is increasing in companies that can achieve good total return – a good dividend yield accompanied by strong balance sheets and high cash flow cover. In low inflation, low-yield environment stocks are likely to remain attractive.