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bnn market call

Michael Smedley.Fred Lum/The Globe and Mail

Michael Smedley is chief portfolio manager at Morgan Meighen & Associates. His focus is on Canadian equities.

Top picks:

The Middleby Corporation
This company is a world leader in restaurant chain kitchen equipment, with emphasis on quality of environment and growing by acquisition through cash flow generation rather than share dilution or high debt. (First bought at $94.69 U.S. and ten dollars lower.)

Canadian Pacific Railway Ltd.
A cost-stripping and operating-efficiency model, CP was bought at $55.23.

Clearwater Seafoods Inc.
This is one of the two flagship names in a rare golden era of Maritimes fish industry enterprise (the other is High Liner Foods Inc., recommended last month). Clearwater dominates the East Coast shellfish industry and expert management is capturing Japanese appetites with value-added shellfish. (Clearwater was a new acquisition in November at about $3.20 and at an average price of $3.74 late in December.)

Past picks: Jan. 10, 2012

Research in Motion Ltd.
Then: $15.77
Now: $11.35
Total return: –28.03 per cent

Foran Mining Corp.
Then: $0.60
Now: $0.51
Total return: –15 per cent

The Middleby Corporation
Then: $93.95
Now: $130.13
Total return: +38.52 per cent

Total return average: –1.5 per cent

Market outlook:

I expect more of the same choppy market we have become accustomed to. Volumes will tend to stay low, acquisitions will continue to be a popular strategy for strong corporations in all sectors and mergers to marry assets with financial resources will continue to be conspicuous, particularly in the resources sector. We are presently in an end-of-year/beginning-of-year relief rally across the market but don't expect that to be sustained. Finding the winners will stay important and so will dividend income.