Bruce Campbell is president and portfolio manager of StoneCastle Investment Management. His focus is on Canadian equities.
Easyhome Ltd. (EH TSX)
Easyhome operates two divisions: their legacy leasing business and their upstart financial business. The accelerated earnings is coming from the financial side of the business. Q1 results reported in May were record numbers. Strong lending book growth lead to strong margins, lead to strong EPS. They just announced a new financing package which will fund their growth out to 2016. With the announcement they also increased their guidance for this year and next.
Patient Home Monitoring (PHM TSX-V)
PHM has also been growing via acquisition, consolidating companies catering to numerous indications across geographic regions. The company is starting to see very strong organic growth via cross-selling between indications. They have several larger acquisitions in the pipeline, so much so they are also looking at ways to minimize their taxes going forward.
Elkwater Resources (ELW TSX-V)
Soon to be Striker Exploration. This is your opportunity to get in on a company like Raging River at the beginning. Just announced last month, the management team with an all-star board of directors have recapitalized this junior shell and will be looking for a transformational acquisition of Alberta Viking properties. The team at ELW has a multiple disciplinary skill-set in exploration, production, finance and capital markets. You don’t get many opportunities to invest in the early stages of a company like this unless you’re friends with the CEO.
Past Picks: October 16, 2013
AutoCanada (ACQ TSX)
Then: $38.67; Now: $73.49 +90.04%; Total return: +92.49%
Air Canada (AC.B TSX)
Then: $4.99; Now: $9.73 +94.89%; Total return: +94.89%
Alimentation Couche-Tard (ATD.B TSX) - Stock Split 3 for 1 – April 23, 2014
Then: $69.36; Now: $30.08 +32.10%; Total return: +30.59%
Total return average: +72.66%
"Now" figures are intraday from the date of the analyst’s appearance on BNN Market Call.
Longer term, we are positive on the markets. The top down indicators that we follow continue to be positive and as long as they remain this way we are positive on the markets. Economic indicators like the Unemployment claims, Leading Economic Indicators, Consumer Confidence and CEO confidence are all strong. There has been much talk about the percentage of bullish versus bearish investors. The information diverges depending on the source. Newsletter writers are at all-time highs for bulls vs bears (a potential negative for the markets), while individual investors continue to get more bearish as indicated by the last week’s AAII data (bears increased 1.5 per cent while bulls dropped 2.7 per cent).
We continue to see two of the strongest indicators of recession and corrections positive. The price of oil rising by over 80 per cent over 12 months and an inverted yield curve. Both are positive at this point in time which is positive for the economy and markets. Short term we wouldn’t be surprised to see some volatility and a potential pullback over the next quarter. From a statistics and probability standpoint we are overdue for a pullback in the 5-10-per-cent magnitude. We ask what could change that would start the selloff. Rates, earnings, geopolitical events could all be a source of surprise. One indicator that has flashed a warning signal is the “boom” magazine cover indicator. In 2000 and 2007 the word “boom” appeared on the cover of a major U.S. magazine before the market topped out. Just recently the word “boom” appeared in a Bloomberg article. One more thing to keep a close eye on going forward.
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