Charles Lannon.
Charles Lannon is director of research at Toron Investment Management. His focus is on global equities.
Top picks:
MetLife Inc.
MetLife represents a rare opportunity to invest at a trough price on trough earnings in a very strong franchise. The stock is attractive if low long-term rates continue to persist, but still represents a free option on the possibility of higher future interest rates.
Nutreco Holding N.V.
Nutreco is one of two firms that dominate the highly attractive, niche agri-business of aquaculture and aquaculture feedstock. The industry should continue to exhibit one of the highest growth rates in the entire agri-business complex, and the dividend, which is attractive at the current 3-per-cent level, will grow materially over the next three years.
Parkland Fuel Corp.
Parkland's dividend equates to a 6.1-per-cent yield and is secure. In an environment where long-term corporate bonds can yield as little as 3 per cent and preferred shares may yield only 4.5 per cent, this is highly attractive especially on a taxable basis. The valuation of the shares is reasonable, and over the past couple of years the new management team has significantly reduced the business risk.
Past picks: April 24, 2012
CLP Holdings Ltd.
Then: HKD 66.25
Now: HKD 68.45
Total return: +7.41 per cent
U.S. Bancorp
Then: $31.62
Now: $34.03
Total return: +10.21 per cent
Canadian National Railway Co.
Then: $81.24
Now: $100.89
Total return: +26.32 per cent
Total return average: +13.65 per cent
Market outlook:
Toron expects that 2013 could be another strong year for global equity markets, as the valuation and interest rate climate remains supportive. The economic recovery in the U.S. is gaining traction, and because the U.S. remains the single largest economy in the world this is enough to move equity markets higher in most countries. Stocks that combine attractive dividend yields with visible earnings growth prospects should continue to disproportionately benefit in this environment. U.S. and other global equity markets should continue to outperform the TSX, whose performance will continue to be hampered by its enormous weightings in Canadian energy, gold and financial stocks.