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Keith Richards.
Keith Richards.

BNN Market Call

Three top stock picks from ValueTrend’s Keith Richards Add to ...

Keith Richards is portfolio Manager at ValueTrend Wealth Management of WorldSource Securities. His focus is on technical analysis.

Top picks:

Pembina Pipeline

I’ll keep this one on my list, because it’s our favourite in the pipeline space. We think it’s got lots more upside. Dare I say it – it could be a “long term hold.”

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CAE Inc.

We just bought it last Friday at $11.25. They make flight simulators, and train pilots on new aircraft both in the private and military. Fantastic breakout through $11 base; target is $13.

Texas Instruments Inc.

This former “old school” stock – Texas Instruments – broke out of a triangle that had formed between 2011 and 2013. More importantly, it has broken out of a sideways trading range that lasted through the entire “lost decade” – beginning in 2001. This company still offers the age-old calculators, but also engages in selling semiconductors to various manufacturers, and processing devices for wireless devices. It’s not so “old school” any more. We haven’t bought it yet, but expect to buy it over the coming weeks upon any market weakness.

Past Picks: August 23, 2013

CASH

Parkland Fuel
Then: $17.30
Now: $18.31
Total return: +6.36 per cent

Pembina Pipelines
Then: $32.11
Now: $34.00
Total return: +6.33 per cent

Total return average: +4.23 per cent

Market outlook:

Investors who follow seasonal investment trends will know that the “best six months” strategy begins in late October or early November. The best six month strategy does not imply that every year will be bullish between November and May. Nor will the “worst six months” (June-October) be bearish every year. For example, performance during the “worst six months for the past two years – at least for U.S. markets – has been anything but bearish. The problem that arises over the summer and fall period is the tendency for stock markets to experience proportionately larger selloffs, if and when one does occur. Thus, I like to say that the problem with investing in the fall is a geometric one (i.e. the size of a selloff) rather than an arithmetic one (i.e. the frequency of selloffs). Now that we’re about to enter into the “best six months” period, investors should consider buying good quality stocks and ETFs with any cash that they’ve held over the summer or fall. Any volatility over the coming weeks resulting from the ongoing noise in Washington should be used as a buying opportunity.

I’m largely avoiding any index strategies revolving around the Canadian market this year. The TSX chart shows little sign of breaking into a bull market at this time. Instead, I’m largely focusing on U.S. and international index-based plays. That’s not to say that I won’t hold any Canadian stocks. In fact, one of the sectors that I am outrageously bullish on is the Canadian pipeline sector. Given the appealing charts, the outlook for domestic pipeline development going forward, and the strong dividend yields, I’m well invested in the pipelines. My overall thesis when looking at Canadian stocks is to look at dividend payers with great charts. My past picks from my last appearance on BNN reflect that sentiment.

In the U.S., we’re looking at some really interesting buying opportunities over the coming weeks. To just name a few, we are very intrigued by the financial sector – both the banks and insurance side. U.S. banks have been a bit weak lately, but we view any further weakness as a good entry point, so long as the longer-termed trendlines for these stocks are not violated. We don’t hold any banks at this time, but we are watching them with a keen eye. Insurance companies are now just starting to break out to the upside from multi-year consolidation patterns. We also like a few select technology stocks, and “old school” stocks that have reinvented themselves.

The seasonally favourable time to be invested in equities is soon upon us. Market volatility over the coming weeks will present opportunities to invest any cash investors have held.

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  • CAE-T
  • TXN-Q
  • PKI-T
  • PPL-T
Live Discussion of CAE on StockTwits
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Live Discussion of TXN on StockTwits
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Live Discussion of PPL on StockTwits
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