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Norman Levine is the managing director at Portfolio Management Corp. His focus is on North American large caps.Fred Lum/The Globe and Mail

Norman Levine is managing director, Portfolio Management Corp. His focus is North American large caps.

Top Picks:

Morneau Shepell (MSI.TO)

Originally bought a number of years ago at $8.20, we are currently buying it for new clients.

Morneau Shepell is a leading provider of human resources consulting and outsourcing services. It is the only human resources consulting and technology company that takes an integrative approach to employee assistance, health, benefits, and retirement needs. The company is the leading provider of employee and family assistance programs, the largest administrator of retirement and benefits plans and the largest provider of integrated absence management solutions in Canada. MSI is viewed mostly as a steady, boring business and an income play. The stock currently yields 5.4 per cent. The dividend has not been raised in the past 5 years, but as the payout ratio approaches 65 per cent in 2016, we feel an increase could occur. Meanwhile, earnings are expected to grow 5 per cent in 2015 and 6 per cent in 2016. Not exciting, but not dangerous either. A good total return company.

Pentair (PNR.N)

Bought at $62.50 on August 17, 2015.

Pentair is an Ireland-incorporated, UK-tax resident company run out of Minneapolis that is diversified across four major groups: valves and controls, flow and filtration, technical services and water quality. It was put into our portfolios to replace Pall Corp. (being taken over by Danaher), as we wanted to still have exposure to the water and fluids management business. Pentair grows both organically and by acquisition and recently acquired Erico Global, an electrical fastenings company. Erico is expected to be 40 cents accretive to earnings in 2016. The stock is down since the beginning of 2014 due largely to its exposure to the energy sector and the fact that over 50 per cent of its revenues are from outside the U.S. This has offered us a rare opportunity to buy a high-quality company at a market multiple, whereas it normally trades at a premium to the S&P. Pentair has raised its dividend for 39 consecutive years and currently yields 2.8 per cent.

Sun Life Financial (SLF.TO)

Originally bought at $22.91 on March 23, 2012 and we continue to buy it for new clients.

Sun Life is Canada's third-largest life insurance company, operating in Canada, the U.S., Asia, the UK, and Ireland and, through MFS Investment Management, is one of North Americas largest investment managers. We like the outlook for life insurance companies in Canada (we like them better than Canadian banks at this time) as their earnings and dividends are expected to grow faster than those of the banks and they will benefit from the eventual increase in bond yields, especially in the U.S. We very much like the fact that Wealth Management provides about 45 per cent of earnings, and two recent acquisitions in the U.S. should increase that amount. SLF recently increased its dividend for the second time in 2015, and we expect it to continue to do so every two to three quarters for the foreseeable future. It currently yields 4 per cent.

Past Picks: January 12, 2015

BB&T (BBT.N)

Then: $36.49 Now: $31.78 -12.91% Total return: -10.51%

BankUnited (BKU.N)

Then: $27.13 Now: $33.15 +22.19% Total return: +25.23%

Vodafone (VOD.Q)

Then: $34.32 Now: $31.58 -7.98% Total return: -3.51%

Total Return Average: +3.73%

Market outlook:

We continue to carry larger-than-normal cash positions in our clients' accounts and are looking for companies and opportunities where we can spend some of that cash. Unlike the financial crisis in 2007 and 2008, where we felt the financial system was at risk, our current cash holdings are due more to valuation concerns. We are working to identify companies with strong balance sheets and good earnings outlooks where their valuations are becoming more reasonable, and we will be buying these stocks over the next few months. While shares of energy and mining stocks continue to decline, we remain largely on the sidelines, awaiting stability and even advancement in commodity prices before we become tempted to add to the area.

More money is lost trying to pick bottoms than any other investment strategy. Most people learn the hard way. There are two kinds of losses: absolute losses attributed to a decline in value and opportunity losses where you give up potential profits. We are in the business of protecting our clients' assets. Therefore we are willing to have some opportunity losses in the mining and energy area until we are sure a turnaround in prices is in place.

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