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Paul Harris.

Paul Harris is partner and portfolio manager at Avenue Investment Management. His focus is North American and global equities.

Top Picks:

Element Financial (EFN-TSX)

Element is one of North America's leading equipment finance companies within the four verticals of commercial & vendor finance, aviation finance, rail finance, and fleet management. The company has strong exposure to the U.S. after their PHH Corp. acquisition last year (acquired their U.S. fleet leasing business) and is well positioned to benefit from the resurgence of the U.S. economy and growth in lease financing.

Trading at: 12.9x 2016 earnings. No dividend

Amgen (AMGN-Nasdaq)

Amgen is a U.S.-based biotech company with a core business of providing supportive care products to kidney disease and cancer patients. The company has a strong pipeline of new drugs awaiting regulatory approval – the biggest being a cholesterol lowering product with a potential release during the second part of the year – and also has a strong roster of legacy products that provide a market-leading position. Amgen is also pushing hard to cut costs significantly and improve its margins. Amgen has also reiterated its commitment to significantly increase its dividend over the coming years in an attempt to return cash to shareholders.

Trading at: 15.8x 2016 earnings. Yield: 1.9%

Phoenix Energy Services (PHX-TSX)

Phoenix is an oilfield service company that provides horizontal and directional drilling technology and services to oil and natural gas producing companies with a focus in Canada and the United States. The company manufactures and sells drilling technology, drilling motors, and remote access directional drilling equipment. It is also in the process of developing new technologies that allow for real-time drill analytics to flow back to its customers.

Trading at: 18.9x 2016 earnings. Yield: 5.4%

Past Picks: April 29, 2014

Deere & Co. (DE-NYSE)

Then: $93.73; Now: $88.94 -5.11%; Total return: -2.48%

Target (TGT-NYSE)

Then: $59.91; Now: $81.92 +36.74%; Total return: +41.00%

Qualcomm (QCOM-Nasdaq)

Then: $78.52; Now: $67.91 -13.51%; Total return: -11.56%

Total return average: +8.99%

Market outlook:

The past few months have seen the return of some volatility to global equity markets. The U.S. economy continues to add jobs at reasonable pace. Our view is the U.S. Federal Reserve may not be able to raise rates this year. The divergence in monetary policies from different central banks across the world has also played an impact on financial markets over the past few months, which we have seen reverberate through FX markets. We see the impact of this with the U.S. dollar at multi-year highs and believe that the European Central Bank needs to see the euro closer to par with the U.S. dollar in order to reduce the deflationary risk and see economic growth. We expect at this late stage of the cycle for the Canadian stock market to underperform U.S. equities, especially on a currency-adjusted basis. We still continue to see value in the Canadian equity market however, and our focus is on owning quality companies that have strong dividend yields, exposure to the U.S. economy, and are underappreciated by the market.

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