Stan Wong.
Stan Wong is director of wealth management and portfolio manager, Stan Wong Private Wealth Management, ScotiaMcLeod. His focus is North American large caps and ETFs.
Top Picks:
Facebook (FB.O)
With the recent share price decline, Facebook shares look attractive and provide investors with the opportunity to accumulate ownership in the world's largest social media company. Facebook has a growing base of nearly 1.5-billion users and is building other strong franchises in Instagram, Messenger and WhatsApp. Facebook enjoys considerable competitive advantages in social media due to its strong global branding, growing user base, high levels of engagement and considerable access to useful user data. FB revenues and gross margins are expected to trend higher reflecting progress with mobile advertising and higher pricing. As well, FB is expected to capitalize on additional monetization opportunities related to video and Instagram in the near term. Longer term, Facebook is forecasted to deliver a remarkable earnings growth rate of about 25 per cent.
UnitedHealth Group (UNH.N)
UnitedHealth Group is a leading diversified health care services company providing health benefit services and systems in the United States. UnitedHealth Group is well-positioned to benefit from 0he Affordable Care Act (ACA) and aging U.S. demographics. UNH shares look attractive given the company's strong growth rate relative to its peers and expected growth in membership. The recent decline in UnitedHealth Group shares has provided an attractive buying opportunity given UNH's industry leadership and forecasted long-term earnings growth rate of about 12 per cent. UNH currently trades at a 17x forward price-earnings multiple and pays a 1.7-per-cent dividend yield, which is expected to grow over the next several years.
Walt Disney (DIS.N)
Disney is the world's most dominant media and entertainment conglomerate with diversified operations in theme parks, filmed entertainment, television broadcasting (ABC, Disney Channel & ESPN) and consumer products. The recent share price selloff appears overdone and presents an excellent buying opportunity given the positive catalysts ahead including the upcoming Star Wars movie franchise releases over the next few years along with several highly anticipated movie sequels (Finding Dory, Toy Story 4, Frozen 2 and Pirates of the Caribbean 5). Another positive catalyst to consider is the upcoming opening of the Shanghai Disneyland Park in China. Longer term, the Disney is expected to deliver a solid earnings growth rate of 12-15 per cent.
Past Picks: July 23, 2014
Crescent Point Energy (CPG.TO)
Then: $45.29; Now: $14.74; -67.45%; Total return: -63.93%
Michael Kors (KORS.N)
Then: $81.71; Now: $43.28; -47.03%; Total return: -47.03%
Financial Select Sector SPDR ETF (XLF)
Then: $22.97; Now: $23.74; +3.35%; Total return: +5.16%
Total Return Average: -35.27%
Market outlook:
Recent market action has once again reminded investors that market advances typically take the stairs up and market declines typically take the elevator down. While it is difficult to assess whether a market bottom has been found during this "Made in China" correction or if there will be a retest of the lows, we do expect the present bout of volatility to be ultimately measured in days or weeks rather than quarters or years. It is worth noting that Asia represents just 14 per cent of overall S&P 500 company sales. When looking at market valuations, the S&P 500 index is currently trading at a 17x forward price-earnings multiple – representing reasonable value especially considering the low interest rate and low inflation environment. Economic indicators continue to point to expansion in the U.S. with labour, housing and consumer trends improving. In our view, it is very unlikely that we are looking at a possible U.S. recession or global slowdown – hence, it is very unlikely that we are facing a prolonged correction or bear market. While volatility may persist in the near-term, the recent market action has offered undeniable opportunities in several large-cap, high quality North American (particularly U.S.) companies with solid earnings and positive growth attributes. At Stan Wong Private Wealth Management, we have prudently deployed cash amidst the market turmoil into several attractive large-cap names and continue to seek additional opportunities. We favour names in the consumer discretionary, health care and information technology sectors.