Gordon Reid is president and CEO of Goodreid Investment Counsel Corp. His focus is on U.S. equities.
Top Picks:
Alere Inc.
Alere is a health care company that specializes in diagnostic, testing and monitoring products. They are growing earnings and cash flow rapidly on the back of new product development, geographic penetration and solid financial stewardship. With earnings growth projected to be in the range of 15 per cent and earnings multiple at 13 times, this issue represents great value.
Boeing Co.
At 16 times 2014 expected earnings and a very predictable growth rate of cash flow and earnings through the end of the decade, Boeing represents an excellent opportunity. Fuel efficiency is the key to commercial aerospace. New aircraft are 10-15 per cent more fuel efficient than older fleets and in a very competitive airline space are necessary to survive and grow.
Google Inc.
The key driver for Google is creating a more profitable mobile platform. While ad revenue in total has been skyrocketing, the fear has been that it is skewed toward lower margin mobile searches. As margins level off and the opportunity that mobility offers to Google is more clearly understood, expect the stock price to correlate with earnings growth and for valuations to remain in a tight band.
Past Picks: March 13, 2013
Halliburton Co.
Then: $41.84
Now: $56.77, +35.68%
Total return: +37.21%
Hornbeck Offshore Services
Then: $43.69
Now: $40.41, -7.51%
Total return: -7.51%
Walt Disney Co.
Then: $57.34
Now: $80.52, +40.53%
Total return: +42.16%
Total return average: +23.95%
"Now" figures are intraday from the date of the analyst's appearance on BNN Market Call.
Currency figures are in U.S. dollars.
Market outlook:
The U.S. equity market had a short, sharp, yet shallow correction in January and our expectation is that this pattern will play out in 2014. As a group, stocks are fairly valued, suggesting that broad indexes can work higher in 2014 but at a rate that correlates more closely to earnings growth than we witnessed in 2013. Additional opportunity lies in highlighting undervalued specific situations.