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bnn market call

Greg Newman.

Greg Newman is director and associate portfolio manager at ScotiaMcLeod. His focus is Canadian dividend stocks.

Top Picks:

Norbord Inc. (NBD.TO)

Norbord offers investors a concentrated play on U.S. housing growth and improving OSB prices. While this is a cyclical name, we believe a combination of merger synergies and U.S. dollar tail winds bode well for its outlook over the next 12 months.

Manulife Financial Corp. (MFC.TO)

Manulife appears on track to achieve solid EPS growth from its underlying businesses in insurance and wealth products in the U.S., Asia and Canada. Enjoy what we believe is a solid 3.1-per-cent dividend and U.S. dollar tail winds while they grow their business.

Hudson's Bay Co. (HBC.TO)

Hudson's Bay Company appears poised to achieve solid EPS growth by expanding their retail platform, real estate monetization and growth by acquisition. Investors can enjoy a solid U.S. dollar tail wind with its U.S. operations at a time when Americans may be more in a mood to shop.

Past Picks: September 19, 2014

Canadian Natural Resources (CNQ.TO)

Sold all early last Oct at around $41

Then: $44.07 Now: $33.71 -23.51% TR: -21.37%

Intact Financial (IFC.TO)

Then: $72.38 Now: $90.90 +25.89% TR: +28.56%

Hudson's Bay Co. (HBC.TO)

Then: $17.17 Now: $22.54 +31.28% TR: +32.74%

Total Return Average: +13.31%

Market outlook:

Markets are only easy when looking backward and this period is certainly no exception. Most of the "bad parts" of the market – resources and energy – still have not bottomed and most of the "good" parts are getting crowded, in my opinion. The U.S. markets have everything going for them (relative to everyone else) except valuation. Europe is less expensive and China is cheaper still. While a December Fed rate hike might be a "live" possibility, in my opinion, falling global bond yields are still the greater concern. I believe a global recession will likely be averted given the policy firepower that China has and their motivation to act. As such, I am constructive on stocks as they are still far cheaper than bonds. For Canadian dollar accounts, buy Europe, global technology and the U.S. on a currency hedged basis and buy Canadian dividend stocks that have catalysts to go higher.