Darren Sissons is managing director at Portfolio Management Corp. His focus is on global large caps.
- 1) progressive dividend currently yielding 2.8 per cent,
- 2) reasonable balance sheet,
- 3) strong risk culture as the bank did not get into subprime trouble,
- 4) leveraged to eastern U.S. business growth, employment improvements and better commercial and residential real estate markets, and
- 5) like all banks, the company will benefit from higher interest rates, which we don’t currently have but will eventually endure.
Wm. Morrison Supermarkets Plc
- 1) progressive dividend currently paying 4.3 per cent,
- 2) €1-billion share buyback completed in 2012,
- 3) strong balance sheet including owning +90 per cent of its real estate assets debt free,
- 4) currently inexpensive as many investors have exited the U.K. market due to the negative impacts of the continuing European recession, and
- 5) The company is now exploring opportunities to monetize its substantial real estate portfolio and as much as €2-billion could be returned to shareholders over the next five years in the form of special dividends, dividend increases and or share buy backs.
- 1) a progressive dividend currently yielding 2.6 per cent,
- 2) strong balance sheet,
- 3) is reasonably valued,
- 4) new subway operations in Hong Kong will drive earnings moving forward,
- 5) other earnings drivers include multi-year subway management contracts in Australia, China, Sweden and the U.K. along with property management at owned subways and property development gains associated with the development of new subway locations on their land.
Past Picks: October 15, 2012
Total return: +67.08 per cent
Total return: +10.35 per cent
Total return: +23.72 per cent
Total return average: +33.72 per cent
I currently have mixed views on the markets and believe more risk now exists than many investors appreciate. The U.S. continues to gradually improve as employment levels are rising, banks are lending again and the real estate sector is showing signs of life. These positives will continue but with a growth outlook of 1 per cent I am surprised by the volume of U.S. equity inflows and the strong attraction many investors have for the U.S.
Europe is experiencing similar equity market inflows despite a toxic macro outlook, which includes: high unemployment, a weak banking sector that needs to be re-capitalized and fiscal austerity being imposed by many Eurozone governments. Growth outlooks for Europe remain negative. Asia, while slowing is still growing.
Latin America is now experiencing the typical growth hangover the region always experiences post a growth spurt, i.e. high inflation, minimal growth, currency problems and government interference. Given the above, investors should consider raising cash levels.
Asia now offers the best investment opportunities over a three- to five-year time horizon. Investors should also have capital committed to Europe and the U.S. as despite my concerns over the high valuation of stocks in these regions, the share prices of quality companies in these markets will likely have higher share prices next year.
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