Mike Newton is Portfolio Manager and Director, Wealth Management at The Newton Group, ScotiaMcLeod. His focus is North American large caps and ETFs.
Catamaran is a leading provider of pharmacy benefit management (PBM) and health care information technology (HCIT) services. The company has had a challenging year on concerns that the introduction of the new health insurance exchanges related to Obamacare could negatively impact the company. CTRX has met many milestones this year and earnings have grown 65 per cent, yet the stock continues to lag. The shares represent a very attractive risk/reward profile.
LV is the world’s largest luxury-products maker, has a unique portfolio of over 60 prestigious brands, has a retail network of 3,204 stores and is the only group present in all luxury sectors. As sales growth has recently slowed, LV plans to take the brand even further upmarket in a bid to appeal to the wealthiest shoppers while driving up prices to improve margins. Shares are attractive at these levels.
The $15-billion French company Dassault Systèmes, is the world’s leading computer design and simulation company. Their software allows designers and engineers to work in simulated 3-D environments. It creates virtual objects, then tests how they will react to simulated use and stress. Engineers use its computer-aided tools to model designs digitally before actually making them, thus saving time and money. The shares look cheap after an October sales warning.
Past Picks: DECEMBER 19, 2012
Chipotle Mexican Grill
Then: $288.89 (U.S.)
Total return: +77.45 per cent
Then: $3.65 (CAD)
Total return: -27.52 per cent
iShares Emerging Markets Dividend Index
Then: $55.20 (U.S.)
Total return: -8.41 per cent
Total return average: +13.84 per cent
The recent rally is still not widely embraced. Many investors continue to be deeply suspicious about the underlying economic reality. They have invested in an uncommitted fashion, focusing on defensive, low beta stocks rather than more aggressive, often cyclical, high beta stocks. If history provides any guidance, there will be a shift to more cyclical, higher beta names, before this rally can begin to stall. For 2014, I would urge investors to place more emphasis on stock-specific fundamental trends as opposed to more passive strategies when positioning portfolios.