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market call

Michael Sprung is president of Sprung Investment Management. His focus is on Canadian large caps.

Top Picks:


CIBC has undergone a transformation over the last 10 years. The balance sheet is much improved and the bank has the largest proportionate capital base of its peers and achieves the highest return on equity. The valuation of CIBC's shares has yet to reflect the improvements of its reduced risk exposure.

Encana Corp.

Encana is one of North America's largest natural gas producers with an enviable growing stable of assets extending from British Columbia to Texas and Louisiana, participating in many of the key sectors, including the Barnett Shale, Montney, Horn River, Piceance and Haynesville. A joint venture has been agreed with Mitsubishi Corp. to develop resources in Cutback Ridge. Weak natural gas prices have negatively impacted the share price. Rising demand over the next few years should be reflected in future valuation. The dividend yield is close to 3.9%.

CAE Inc.

CAE is a world leader in flight simulation systems for commercial and military customers. In addition, the company designs products for applications in the health care and mining industries. New aircraft that are coming into service will cause demand for CAE's products to increase. The shares are attractively priced close to $10.

Past Picks: March 3, 2011

Royal Bank of Canada

Then: $59.92

Now: $58.78

Total return: +2.05%

Alliance Grain Traders Inc.

Then: $29.85

Now: $15.07

Total return: -48.19%

Stantec Inc.

Then: $28.40

Now: $32.39

Total return: +14.05%

Total Return Average: -10.69%


The recent advances in the global equity markets have been in reaction to improving economic fundamentals. In the U.S., employment has been on the rise and manufacturing, particularly in the auto sector, is recovering. In Europe, recessionary conditions are proving to be milder that originally feared and the crisis in Greece has abated for the time being. Although the world economies appear to be achieving a more solid footing, the recovery remains fragile and setbacks could occur in reaction to further European fiscal calamities and slowing demand from the emerging economies. Investors should be prepared to take advantage of these potential negative reversions.

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Compiled by Franklin Cameron, BNN Market Call Tonight


Also see:

3 top stock picks from portfolio manager Jeff Parent

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3 top picks from GlobeInvest's Christine Poole

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