Rick Stuchberry is vice-president and portfolio manager at Richardson GMP. His focus is on Canadian large caps and international ADRs.
Infosys Limited ADS (INFY NYSE)
Infosys is a global leader in technology outsourcing solutions. They have no debt, a strong cash position, solid free cash flow, and a great growth rate. Although they are an Indian company, most revenue comes from the U.S. and Europe, where revenue is earned in strong currencies and costs incur in rupees. The victory of Narendra Modi’s Bharatiya Janata Party in India's recent parliamentary elections has prompted us to increase our weighting in Indian stocks.
Dr. Reddy’s Laboratories (RDY NYSE)
This is a leading global generic drug company focused on making affordable medications. They sell their generic pharmaceuticals globally, but we see better potential growth in North America due to Obamacare. They have high gross margins, a sensible balance sheet, and a small annual dividend.
Ambev SA ADR (ABEV NYSE)
Ambev is the South American division of the world’s largest brewer IMBEV. They have over 60-per-cent market share of beer in Brazil. They have faced a couple of headwinds with new taxes on beer being announced holding the stock back, but with annual growth over 10 per cent and a dividend policy with a 40-per-cent payout of net income, we like being invested in the emerging markets in a stable conservative company.
Past Picks: May 2, 2013
HSBC Bank (HSBC NYSE)
Then: $55.30 (U.S.); Now: $52.14 -5.71%; Total return: -0.35%
AltaGas (ALA TSX)
Then: $37.51 (Cdn); Now: $49.44 +31.80%; Total return: +37.44%
Ambev SA ADR (ABEV NYSE)
stock split Nov. 11, 2013: 1 for 5
Then: $40.58 (U.S.); Now: $7.09 -12.64%; Total return: -9.93%
Total return average: +9.05%
The market cannot seem to correct, so there is no reason to believe it should correct any time soon. There is too much cash in the system and every time the markets try to correct to the downside, massive buy side support holds up all the gains. We see multiple expansion continuing in the markets, until the moment there is a viable alternative for cash.
We expect the markets to move sideways to slightly higher over the summer months. We have allocated capital into emerging markets and global large cap stocks, and reduced energy investments. There are few sectors in Canada in which we will allocate new capital, and as such have continued to move capital offshore, reducing the risk of downside in the Canadian dollar.
Globe app users can click for a chart showing cumulative U.S. equity and bond fund flows.