Gordon Reid is president and CEO, Goodreid Investment Counsel. His focus is U.S. equities.
Top Picks:
Apple (AAPL.O)
The story of Apple stock seems to be recurring. Investors remain skeptical, with one issue replacing another as a point of concern. Today, it's China and its slowing growth. There is one undeniable fact: Apple has performed, as a company, in a far superior way to the expectations of the market.
Boeing (BA.N)
Boeing's stock price is 18 per cent off its highs despite having excellent visibility of order flow, cash flow and earnings. BA's backlog now tops over half a trillion dollars (U.S.). Worries about Chinese growth seem misplaced as Boeing released a new projection, increasing sales growth expectations to China through 2020 by 5 per cent. With a very predictable growth rate of cash flow and earnings through the end of the decade, Boeing represents an excellent opportunity.
La-Z-Boy (LZB.N)
Household formations in the U.S. are expanding but continue below trend. Consider that new home construction is running at about a million units annually but needs to grow by 50 per cent to keep up to household formations. As these metrics change, the fortunes of La-Z-Boy, a company highly correlated with household growth, will improve.
Past Picks: August 20, 2014
Aegion (AEGN.O)
Then: $24.32; Now: $17.96; -26.15%; Total return: -26.15%
Dana Holding (DAN.N)
Then: $23.85; Now: $16.56; -30.57%; Total return: -29.81%
Time Warner (TWX.N)
Then: $77.02; Now: $71.67; -6.95%; Total return: -5.42%
Total Return Average: -20.46%
Market outlook:
The current market upheaval has all the markings of a bull market correction rather than the beginning of a bear market. High levels of volatility, reversals in direction and swings in sentiment will wash out investors with weak conviction. It will likely last several days to a couple of weeks and result in an investor base with the proper amount of respect for the market, which after all is a risk-based asset.