Michael Smedley.Fred Lum/The Globe and Mail
Michael Smedley is executive vice-president and chief investment officer at Morgan Meighen & Associates. His focus is on Canadian equities.
Top Picks:
BlackBerry Ltd. (BB TSX)
Latest fund purchase was an averaging down at $14.70 in December 2011. This reduced the average cost to $24.27.
This is a long shot in every way but it might just be the right time to give in and put on a recommendation ahead of everyone else. Perhaps its misery is now close to being a past event. The stock is still one of the most broadly covered in the market which is something of a phenomenon explained by the communications technology sector following of Mr.Chen. The sector likes his legendary turnaround record with previous interests. Mr. Chen is unusual. He seems to apply – without dreams, puffery or unrealistic claims – a special logic about what can be done and how to get there. The market has already realized that the way forward is a new BlackBerry company, not an attempt to recreate big ownership of the consumer space that is lost. That struggle is for the newer incumbents against each other. BlackBerry has moved on.
NeuLion (NLN TSX)
Purchased at $1.00 in March 2014
This cloud-based company in my opinion gave one of the most exciting presentations the Canaccord Adams Growth Conference in Boston a week ago. I caution that the world is awash with internet juniors and stagnation lurks everywhere. NeuLion seems to stand aside and stands out in powering video and live content. It is in leadership in an array of major sporting events. Its streaming service had 10 million visitors during the World Cup – the viewing of which was dominated by the mobile world where devices took over 87 per cent of total consumption. Another example with Rogers of success: NeuLion has extended to 12 years a deal to be exclusive national rights holder for the NHL.
Algoma Central (ALC TSX)
It was last purchased – by the fund – at $7.696 in September 2005.
For my third pick I have my feet firmly on the ground – more accurately, treading water with the largest shipping fleet on the Great Lakes: a 200-year-old company that is quietly humming across the lakes and in coastal transportation along the east and west coasts of North America. It could be regarded as one of those steady smaller cap risers mentioned in Market Outlook. Algoma Central carries all of the big lake borne commodities and might even have a short and medium term rally as it transitions part of its fleet into $500-million worth of modern, more economical vessels. That is taking place right now. I have written a note on this investment titled "Tip-toeing through the Great Lakes".
Past Picks: September 4, 2013
Vodafone (VOD NASDAQ) * Stock Split * Feb. 24, 2014 - 6 for 11
Then: $32.41; Now: $33.50 -17.24%; Total return: +0.35%
Tesla Motors (TSLA NASDAQ)
Then: $170.62; Now: $254.34 +49.07%; Total return: +49.07%
DH Corp. (DH TSX) (previously Davis + Henderson)
Then: $26.54; Now: $33.25 +25.28%; Total return: +29.27%
Total return average: +26.23%
Market outlook:
The monotonously idyllic summer grinds on relentlessly; investors question the timing of "the correction", whereas the future probably offers simply a continuum of mini-corrections when sectors and lots of stocks rally well and fall back for a breather. That usually is just bouts of profit-taking or a temporary softening in quarterly numbers, or a downgrade from an analyst from buy to hold. That sometimes reduces the price of a stock in the market, although it appears to be a misnomer; why would you hold a "hold" if there is something to buy with the money? The answer is that is the aggressive way forward whereas just holding good companies should be the best course for the long term. There is actually very little noise in the market; interest rates continue settled and low – meaning dividend stocks are very much worthwhile; prices of commodities are mostly quite stable; energy stocks seem to be catching most of the prevailing interest in the market. Technology, healthcare and biotech stocks continue as nearly always to be the most vibrant groups and the big winners are those high quality illiquid names which are largely unnoticed and just keep rising. I keep many of those on my shelf while I carry on looking for "discoveries", turn-around situations and new public companies that seem to promise performance.