Paul Harris is a partner and portfolio manager at Avenue Investment Management. His focus is on North American and global equities.
Regions Financial Corporation
This commercial and retail bank in the southeast United States will benefit from a continuing improvement of the U.S. housing market and a continued reduction in costs. The stock trades at 0.7 times book value and nine times earnings.
This furniture and appliance retailer is a great Canadian brand. It has a 3.3-per-cent yield and trades at 10 times earnings. A conservative estimate of the property it owns is $5 a share. Its purchase of the Brick should lead to further growth in the next several years.
We believe TD's strategy of growing its retail operations in the U.S. will be very effective over the long run. Its recent purchases were astute and achieved at a low valuation. The stock trades at 10 times earnings and 1.8 times P/BV and has a 3.9-per-cent yield.
Past picks: May 15, 2012
Davis + Henderson
Total return: +46.15 per cent
Total return: +16.07 per cent
Bank of America
Total return: +90.72
Total return average: +50.98 per cent
We believe the tremendous amount of sovereign debt outstanding globally will lead to slower growth around the world over the next several years. This will keep rates low for an extended period of time and inflation will be benign. In this environment we look for companies with strong balance sheets and growing dividends.