Jim Huang is president of T.I.P. Wealth Manager. His focus is on North American equities.
Top Picks: Talison Lithium Talison is the world's largest producer of lithium products and has its operations in politically stable Australia. It has been in operation for decades and generates steady cash flow and earnings. The use of Lithium is experiencing strong growth due to the proliferation of portable electronic devices and the potential expansion of electric vehicles. Talison is on schedule to double its production capacity by mid-2012 which could materially increase its earnings going forward.
Suncor Energy Canada's pre-eminent oil sands player with a premium portfolio of assets and a long operating history. Suncor is back on the growth path now that the integration of Petro-Canada is completed and debt is being paid down through successful asset sales. Operational difficulties are being overcome and current oil price makes it a great free cash flow generator with good growth. Unrest in the Middle East should not have a big impact on the company.
MI Developments Yet another spin-off from Magna International, MI is finally free of the baggage of the past. With the elimination of the dual class voting structure and installation of new boards and management, MI is set to create shareholder value by effectively utilizing its vastly under-levered balance sheet to broaden real estate holdings and grow dividends. The recent announcement of a conversion to a REIT and a large increase to dividends is but the first step to enhance shareholder value.
Past Picks: July 13, 2011
Potash Corp. Then: $55.82 Now: $46.09 Total return: -17.18 per cent
Suncor Energy Then: $38.07 Now: $35.68 Total return: -5.31 per cent
MI Developments Then: $29.17 Now: $36.95 Total return: +29.26 per cent
Total Return Average: +2.26 per cent
OUTLOOK The market is off to a strong start in 2012. Recent economic statistics have confirmed that both the U.S. and China are still growing despite signs of a slowdown. Various initiatives in Europe also started to address the underlying issues of the sovereign debt crisis, though much more hard work lies ahead. After the strong gains, it is likely that markets may correct and settle into a wide trading range for a period of time. With corporate earnings resilient and interest rates low, economic growth will remain positive and will drive further upside in the stock markets for the entire year.
Compiled by Franklin Cameron, BNN Market Call Tonight