Stan Wong is vice-president and portfolio manager at Macquarie Private Wealth. His focus is North American large caps and ETFs.
As the world’s largest retailer, Wal-Mart operates a chain of over 10,000 discount department stores, wholesale clubs, supermarkets and supercentres. Over 100 million people walk into Wal-Mart stores every week, making the company a dominant player in most of the markets it competes in. With the recent dip in the share price, Wal-Mart’s stock is compelling as it currently trades at reasonable valuation, is expected provide a long-term annual earnings growth rate of 9-10 per cent and yields a 2.4-per-cent dividend which is projected to grow by 9-10 per cent a year.
JPMorgan Chase & Co.
JPMorgan Chase is a leading global financial services company with assets of nearly $2.4-trillion (U.S.) and operations in over 50 countries worldwide. JPMorgan’s core businesses look solid with strong investment banking, trading and mortgage banking. A recovering U.S. housing market, lower loan losses and improving capital markets is favourable for JPMorgan. The stock currently trades at a valuation discount to its peer group and yields a 2.9-per-cent dividend which is projected to grow considerably over the next several years.
SPDR Euro Stoxx 50 ETF
The SPDR Euro Stoxx 50 ETF provides exposure to fifty of the largest blue-chip companies in the Eurozone. The Euro Stoxx index currently trades at a forward price-earnings discount to other major developed regions and this ETF provides a dividend yield of 3.3 per cent. Recent economic indicators show many European economies are finally showing signs of economic improvement and recovery.
Past Picks: September 13, 2012
Total return: +1.70 per cent
Dollar Tree Inc.
Total return: +15.37 per cent
Total return: +31.57 per cent
Total return average: +27.59 per cent
Equity markets appear to be facing several headwinds as we head into the autumn months. Tensions in the Middle East, poor September seasonality, rising bond yields and a debt ceiling impasse will likely cause higher market volatility. However, as greater clarity over the strength of the global economic recovery comes into view and as corporate earnings growth regains momentum, equities will be able to provide renewed gains. Any market setbacks in the coming weeks should be regarded as buying opportunities. More cyclical stocks are preferred as we reduce our weighting to interest-rate sensitive stocks. U.S. large-cap companies with rising dividends and earnings continue to look attractive. Lastly, European equities offer opportunities as the region’s economic outlook improves.