Christine Poole is CEO and managing director at GlobeInvest Capital Management. Her focus is North American large caps.
CGI Group Inc.
CGI is a technology services firm deriving 55 per cent of its revenues from outsourcing and 45 per cent from systems integration and consulting. Having achieved integration targets ahead of schedule, the Logica acquisition positions the company to participate in the European economic recovery. Management remains focused on accretive acquisitions within a consolidating IT services market, share buy backs and debt repayment.
Loblaw Cos. Ltd.
Loblaw is Canada’s largest grocery retailer offering consumers multiple formats including conventional, discount and specialty. Its acquisition of Shoppers Drug Mart provides Loblaw a strong national presence in the attractive health and wellness industry. Loblaws’ store renovation program and IT/supply chain investments should moderate going forward, supportive of improving free cash flow. Loblaw provides investors with a dividend yield of 2.0 per cent.
Boeing is a global commercial aerospace and defence company, experiencing robust demand for commercial aircraft from growth in air travel in developing markets and replacement demand from developed markets. Strong profit and cash flow generation will be driven by production rate increases on its various models (737, 777 and 787) and productivity improvements. Management is committed to return free cash flow to shareholders through dividends and stock buybacks as evidenced by a 50-per-cent increase in its quarterly dividend in December. Boeing offers a 2.4-per-cent yield.
Past Picks: April 9, 2013
LVMH Moët Hennessy Louis Vuitton SA
Then: $33.97; Now: $37.13 +9.30%; Total return: +11.89%
Royal Bank of Canada
Then: $60.17; Now: $73.29 +21.80%; Total return: +26.66%
Chartwell Retirement Residences
Then: $11.33; Now: $10.26 -9.44%; Total return: -4.55%
Total return average: +11.33%
"Now" figures are intraday from the date of the analyst’s appearance on BNN Market Call.
The resiliency of equity markets in the first quarter of the year notwithstanding geopolitical uncertainty, changing U.S. Fed leadership and mixed economic data from emerging markets is encouraging. The re-rating of equities over the past few years is largely behind us, therefore, continued earnings growth is required to drive share prices higher. Manufacturing in the U.S. and Europe is expanding and while the slowdown in China is a concern, the Chinese government’s plan to increase its urbanization rate from 54 per cent presently to 60 per cent by 2020 should be positive for overall economic activity. Interest rates will trend higher as the U.S. Fed continues to gradually taper against a backdrop of moderate global economic growth and relatively benign inflation. Equities remain the favoured asset class and inevitable market pullbacks will be used to increase exposure.
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