Jason Donville is president and CEO of Donville Kent Asset Management. His focus is on growth and financial stocks.
Direct Cash Payments Inc.
The Calgary-based, global ATM company is integrating two recent acquisitions in Australia and England. Early signs suggest these two acquisitions are going to exceed expectations. The company boasts a dividend yield of 5.1 per cent and we expect it will raise its dividend as early as the third quarter of 2013.
Constellation Software Inc.
This Toronto-based software company is on track for a huge 2013. We think the Street is light on its estimates for Constellation and that full-year cash earnings could exceed $260-million. Constellation enjoys a healthy 3.1-per-cent dividend and we expect that will be raised this year, perhaps as early as the upcoming AGM in May.
CGI Group Inc.
Montreal-based CGI Group, which is growing at close to 20 per cent per annum, trades at 8.2 times 2013 cash earnings, making it one of the cheapest large-cap growth stories in Canada. While the company does not pay a dividend, its aggressive share buyback should continue in 2013.
Past picks: May 7, 2012
Paladin Labs Inc.
Total return: +14.55 per cent
Jean Coutu Group (PJC) Inc.
Total return: +6.20 per cent
CGI Group Inc.
Total return: +21.33 per cent
Total return average: +14.03 per cent
While we don't see any particular macro risks on the horizon, we are entering a period of seasonal market weakness, and natural resource stocks appear particularly vulnerable. Now would be a good time for investors to sell their low-conviction holdings with the idea of building cash. Typically, the best time to deploy the cash on bargains is mid-summer.