Michael Sprung is president of Sprung Investment Management Inc.
Michael Sprung, President, Sprung Investment Management. His focus is Canadian large caps.
Top Picks:
Manulife Financial (MFC.TO)
Last Purchase June 16/15, $23.60
Manulife is a leading Canadian-based financial services group with operations in Asia, Canada and the United States. Over the past five years, the company has made tremendous strides in de-risking the balance sheet and improving profitability through increasing wealth management operations, as well as redirecting the mix of products sold. The insurance companies will be amongst the beneficiaries should interest rates start to rise. MFC has one of the strongest capital bases in the industry. Going forward, we anticipate that core earnings growth will continue to stem from the Asian operations as well as from initiatives in the U.S. and Canada. With its strong capital base and improving profitability, dividend increases are likely within the next few quarters.
Encana (ECA.TO)
Last Purchase December 18, 2014, $15.47
Encana is a leading North American energy producer focused on a diverse portfolio of resource plays producing natural gas, oil and natural gas liquids. The company has been affected by the collapse in energy commodity prices over the past year. Management has responded in a prudent fashion through constraining costs and the sale of non-core assets. While addressing concerns over the balance sheet, management has concentrated efforts on the company's primary areas of interest.
CAE Inc. (CAE.TO)
Last Purchase September 24, 2015, $13.74
CAE Inc. is a Canada-based company that provides modelling, simulation and training for civil aviation and defence. The company has a good balance of customers between military and civil applications. CAE has invested over the last few years in expanding training facilities in anticipation of a pending rise in pilot retirements over the coming years, resulting in greater demand for training services. As such, utilization rates should increase as capital expenditures are reduced. CAE is well-financed and managed.
Past Picks: November 21, 2014
Bank of Nova Scotia (BNS.TO)
Then: $70.00 Now: $58.99 -15.73% Total return: -11.99%
Precision Drilling (PD.TO)
Then: $9.15 Now: $5.14 -43.83% Total return: -41.55%
New Flyer Industries (NFI.TO)
Then: $13.04 Now: $24.36 +86.81% Total return: +94.33%
Total Return Average: +13.60%
Market outlook:
Volatility continues to reflect investors' concerns with respect to the health of the global economy as we near the end of the year. While attention regarding the slowing economic growth in China persists, more focus of late has centred around the likelihood of an increase in interest rates in the United States. Evidence still point to an expanding U.S. economy, albeit at a lacklustre pace. The recently strong employment figures would point towards a higher probability of an increase in interest rates. However, given the slow pace of the recovery that is now in its sixth year along with some weak evidence of softening industrial production, the federal reserve could hesitate yet again to raise rates. In Canada, greater uncertainty exists with respect to the as-yet undefined plans of the new federal government, while the beleaguered energy sector awaits greater details of the provincial regime's policies. Ontario continues to struggle with a large structural deficit at a time when industry is leaving the province due to high taxes and power rates. As the markets react to these issues, stock prices will continue to be volatile. Opportunities will continue to occur when prices decline in reaction to short-term events that investors should be prepared for in order upgrade their portfolios into better managed and financially strong businesses.