David Baskin.Moe Doiron/The Globe and Mail
David Baskin is president of Baskin Financial Services. His focus is North American large caps.
Top picks:
Home Capital Group Inc.
Home Capital is a tremendously profitable, extraordinarily well-run smaller financial company. With return on equity consistently over 20 per cent, strong growth in assets under management and profits, and an enviable record of very small loan losses, the present speculation concerning the exposure of Canadian financial companies to mortgages and housing gives investors a great opportunity to buy a high -quality stock at a discount price.
National Bank of Canada
National Bank is the smallest and most insular of the major Canadian banks, and as a result has always traded at a discount to its peers. With a dividend yield of 4.4 per cent and a price to earnings ratio under 9, this is a very good company at a very low price. We believe fears of over-exposure to a Canadian housing crash are wildly exaggerated.
Brookfield Asset Management Inc.
Brookfield is a holding company with assets in real estate, transportation, power generation and infrastructure. It is a major manager of assets for others on a fee-for-service basis. Brookfield purchased widely and wisely coming out of the downturn and has a large and diverse array of income-producing assets over a wide geographic base. We expect to see consistent and regular dividend growth as the portfolio matures.
Past picks: May 15, 2013
Royal Bank of Canada
Then: $50.38
Now: $60.68
Total return: +25.58 per cent
IGM Financial Inc.
Then: $39.41
Now: $47.52
Total return: +27.02 per cent
Teva Pharmaceuticals Industries Ltd.
Then: $39.05
Now: $39.90
Total return: +4.31 per cent
Total return average: +18.91 per cent
Market outlook:
In spite of the strong performance of equity markets, we do not think the best is behind us. There is still a tremendous amount of cash tied up in money market funds, savings accounts and other very low-yield products. With corporate earnings at record levels and fixed income alternatives so unrewarding, we believe much of this cash will be deployed in the stock markets, leading to further gains. Canadians should be looking beyond the resource-heavy TSX/S&P index to gain exposure to growth areas not readily available in Canada, such as health care and technology.