Andy Nasr is managing director and senior portfolio manager at Middlefield Capital. His focus is on North American dividend stocks and REITs.
Twenty-First Century Fox Inc.
The company has well-branded cable assets and a valuable portfolio of sport rights, which should allow for the monetization of content and affect increased advertising revenues and higher affiliate fees.
Discover Financial Services
We expect the company to benefit from U.S. consumer credit growth, which remains depressed relative to pre-recession peaks. A strong balance sheet and low payout ratio should result in increased share repurchases and dividend growth.
The company should continue to benefit from the relative strength of the North American auto market and provides excellent exposure to an improvement in European auto sales, which remain near 20-year lows.
Past Picks: November 15, 2012
Total return: +25.70 per cent
Total return: +14.95 per cent
Brookfield Office Properties
Total return: +31.53 per cent
Total return average: +24.06 per cent
The global purchasing managers index (PMI), a closely watched indicator that measures new factory orders, rose to a 28-month high in October. Movement in the index usually precedes changes in global GDP and is currently implying that the world’s economy is growing by over 3.5 per cent year-over-year, the fastest rate of expansion since 2010. However, the economic disparity between developed and emerging markets is becoming more pronounced. The structural risks underpinning growth in emerging economies, such as China, are increasing due to excess corporate leverage, inflation and a heavy reliance on fixed asset investment. Our equity allocation remains biased toward developed economies, such as the U.S., where consumers and corporations are well positioned to accelerate spending after several years of debt reduction. U.S. equities are reasonably valued, offer excellent total return potential and represent a low-risk alternative to participating in global growth as constituents in the S&P 500 index derive over 45 per cent of their sales from outside of North America. We have strategically increased our exposure to several sectors that will benefit from: improved U.S. consumer spending; credit expansion, rising household formation and corporate spending on equipment and technology – all of which are still below pre-recession levels.
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