Jason Donville is President & CEO, Donville Kent Asset Management. His focus is on growth and financial stocks.
RIFCO is a Red Deer-based auto lender with a 48-per-cent ROE and trading at just 13x 2014 earnings which is reasonable given its growth rate. The company operates in the lower end of the prime segment of the lending market and therefore is attractive on a risk vs reward basis.
Cipher is a growing specialty pharmaceutical company that is based in Toronto with what appears to be a blockbuster new drug for the treatment of acne. The company boasts a 44-per-cent ROE and trades at 16x 2014 earnings. The company is cash up and we expect it to actively expand its roster of drugs in the coming year.
Constellation is a multinational software company based in Toronto with a superb track record for delivering high returns on capital. Constellation should grow by more than 30 per cent in 2013 and 2014 and trades on 12.6x 2014 earnings. We consider this management team to be the gold standard for asset allocation in Canada. I own it personally and in the fund.
Past Picks: October 3, 2012
Total return: +72.22 per cent
Total return: +111.95 per cent
Total return: -11.48 per cent
Total return average: +57.56 per cent
The potential for higher interest rates combined with seasonal instability means that Q3 will probably be a bumpy ride for investors. Continue to focus on high ROE stocks with strong balance sheets and reasonable valuations.
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