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Michael Sprung is president of Sprung Investment Management Inc.

Michael Sprung is president, Sprung Investment Management. His focus is Canadian large caps.

Top Picks:

Alaris Royalty (AD.TO)

Alaris Royalty is a unique investment firm that invests in a diversified range of private companies with solid long-term histories and stable management teams. The nature of the investment allows Alaris to participate in future growth while the entrepreneurs maintain control provided certain agreed upon benchmarks are met. Management has had a successful track record in identifying good investment opportunities. With growth, the number of opportunities presented to management has increased dramatically. However, management has exhibited tremendous discipline in being selective with whom they partner. As investments and cash flow have grown, dividends have increased. We anticipate that investors will continue to participate in Alaris' growth.

HudBay Minerals (HBM.TO)

HudBay Minerals is one of Canada's leading producers of zinc, copper and precious metals with operations in Canada, Peru and the U.S. Constancia, a major copper-molybdenum-silver mine in Peru, has been ramping up production over 2015. It is expected that recoveries will improve as mill throughput and head grades have exceeded expectations. Transportation issues are being addressed and should be resolved by year end. With other projects coming on stream over the next few years, we anticipate that valuation levels will increase.

Aecon Group (ARE.TO)

Aecon Group is one of Canada's largest construction companies. A large portion of Aecon's business is related to the energy sector and the company's stock price has been under pressure as a result. However, Aecon's backlog in other infrastructure transportation and nuclear projects has been growing. The more sophisticated projects should result in higher profitability. Over the last number of years, management has taken steps to strengthen the financial position of the company. At current prices, the stock presents good value to investors for longer term appreciation.

Past Picks: October 8, 2014

Bank of Nova Scotia (BNS.TO)

Then: $69.15 Now: $59.71 -13.65% Total return: -9.82%

Agrium (AGU.TO)

Then: $96.07 Now: $125.54 +30.68% Total return: +35.16%

Suncor (SU.TO)

Then: $38.13 Now: $37.01 -2.94% Total return: +0.14%

Total Return Average: +8.49%

Market outlook:

Global markets have exhibited high volatility as concerns regarding the health of the global economy have persisted. While much of the international focus has centred around the slowing economy in China, not many markets escaped the negative pressures in the third quarter of 2015.

Economic factors were not the only factors weighing on investors' concerns in the third quarter. Continuing strife in Syria and the resultant mass emigration into Europe, the buildup of Russian and U.S. tensions, Chinese displays of military might and the ongoing political issues in Europe all added to investors' fears.

Through much of the quarter, the U.S. market remained positive as signs of economic expansion continued. Then, the Federal Reserve elected not to increase interest rates, casting doubts in investors' minds as to the underlying integrity of the recovery.

Canadian investors have been caught up in a tediously long election debate. The uncertainties resulting from the threat of a change of government are adding to the concerns stemming from the collapse in energy prices and the waning demand for base metals.

What we are witnessing is a period of adjustment after seeing markets increase since 2008. While there are legitimate concerns that economies are slowing down, the decline in many markets has overreacted. Some of the downward pressure may be attributable to the high degree of margin that had built up over the last few years. However, many of the factors affecting the markets are transitory. It is during these periods that the stocks of good companies get driven down with those of weaker companies. Investors should be using this period of adjustment to upgrade their security positions in stronger, better managed companies in order to participate in the profits to be derived over the next business cycle.

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