Michael Sprung is president of Sprung Investment Management. His focus is on Canadian large caps.
HudBay Minerals Inc.
HudBay Minerals is one of Canada's leading producers of zinc, copper and precious metals. The company has a very strong balance sheet. The company has been methodically addressing concerns regarding its ability to finance the construction of Constancia in Peru, most recently through a royalty streaming arrangement with Silver Wheaton Corp. (SLW) and an issue of unsecured notes.
Encana is currently the third-largest natural gas producer in North America. The company has enviable positions in key emerging properties. Going forward, it has announced plans to expand liquids production in Montney, Duvernay, San Juan, DJ Basin and Tuscaloosa Marine Basin. This expansion will be done with a focus on maintaining the integrity of the balance sheet through disciplined capital spending in line with cash flow.
George Weston Ltd.
Through Weston Foods, encompassing fresh and frozen bakeries, and through Loblaw Cos.’ food distribution operations, George Weston is the largest food distributor in Canada. Weston has a strong cash balance and the company will benefit from the operational improvements undertaken by Loblaw over the last few years. The current competitive environment, particularly in the Ontario region, has caused the shares to retreat to an attractive price level.
Past Picks: December 21, 2012
Total return: +50.16 per cent
Talisman Energy Inc.
Total return: +12.27 per cent
HudBay Minerals Inc.
Total return: -22.63 per cent
Total return average: +13.27 per cent
The global economy exhibits encouraging trends as conditions in Europe have recently been more stable with signs of modest growth, the decline in the growth rate of the Chinese economy has been arrested and the North American economy continues to expand with growing momentum. Stock markets, particularly in the U.S., have surged as investors have regained confidence in the sustainability of the recovery. As we approach the New Year, we suspect that the markets may be vulnerable to a correction as concerns about the curtailment of monetary easing persist, or some geopolitical event, perhaps from the Middle East, disrupt investors' confidence. Beyond that, the Canadian market which has lagged the U.S. this year, should improve as the demand for energy and materials expands with improving economic conditions.
(An earlier version of this story gave incorrect stock prices and returns for Talisman Energy and HudBay Minerals)