Patrick Horan is a principal at Agilith Capital Inc. His focus is on North American equities.
Top picks:
Torstar Corp.
Torstar recently outperformed quarterly results, trades at a 40-per-cent discount to peers, has a high dividend yield and is heavily shorted. Harlequin, owned by Torstar, will benefit from a weak Canadian dollar.
Sirius XM Canada Holdings
CBC announced recently that it was converting its Sirius XM Canada Holdings class B shares into class A shares. We think the stock has already reacted to any potential share sale by CBC and now offers investors over 5-per-cent yield and has the best earnings growth rate in Canadian media. It is one of the best dividend growth stories that we see.
Wal-Mart Stores Inc.
The stock has been disappointing for over two years. We believe that the latest earnings disappointment was attributable to poor weather conditions and should benefit from strong U.S. consumer sentiment. Wal-Mart stock is fundamentally cheap and management has been excellent at returning cash to shareholders while continuing global expansion.
Past Picks: March 7, 2013
Sandvine Corp.
Then: $1.95; Now: $3.16 +62.05%; Total return: +62.05%
Magna International
Then: $56.96; Now: $106.16 +86.38%; Total return: +90.63%
Wal-Mart Stores
Then: $73.32; Now: $76.87 +4.84%; Total return: +8.11%
Total return average: +53.60%
"Now" figures are intraday from the date of the analyst's appearance on BNN Market Call.
Market outlook:
We think that because of the strong returns over the past two years, 2014 will likely be a lower return year. As a result, seasonal factors will likely be more prevalent. Also, in a typical year, the market usually experiences one 10-per-cent correction. This did not happen last year, but we think it is likely to occur in 2014 – potentially in the seasonally weak period between April and September. Notwithstanding a potential pullback, we think that we are in a long-term secular bull market and we will be buyers on the pullback.