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Three top stock picks from Avenue Investment’s Paul Harris

Paul Harris is partner and portfolio manager at Avenue Investment Management. His focus is global equities.

Top Picks:

Element Financial (EFN.TO)

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Element is North America's leading vehicle and equipment finance company. The company has strong exposure to the U.S. and recently completed the acquisition of GE Capital's U.S. fleet management business. Trades at 11.5 times next year's earnings.

Johnson & Johnson (JNJ.N)

JNJ is the world's largest and most diverse health-care company. It has three divisions: pharma, medical devices, and consumer. The stock trades at 16 times 2016 earnings, and a dividend yield of 2.7 per cent.

Kraft Heinz (KHC.O)

Kraft provides food services and food products which include ketchup, Kraft Dinner etc. The stock has a 3-per-cent dividend yield and trades at 25 times 2016 earnings.

Past Picks: November 27, 2014

Qualcomm (QCOM.O)

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Then: $72.26 Now: $49.99 -30.83% TR: -28.65%

Bank of America (BAC.N)

Then: $17.11 Now: $16.83 -1.64% TR: -0.15%

Microsoft (MSFT.O)

Then: $47.75 Now: $55.48 +16.19% TR: +19.36%

Total Return Average: -3.15%

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Market outlook:

Throughout the month of December, markets have largely tread water, with bouts of volatility in the middle of the month once the Fed raised rates. Growth in Canada remained flat during the month of October; meanwhile Q3 growth in the U.S. came in at 2.1 per cent. Pressure remains on the price of crude oil coming out of the last OPEC meeting in November, where the lack of a cohesive strategy among member countries means that in the near term supply remains abundant. The U.S. dollar continued to strengthen against the loonie in the month, aided by the U.S. Fed rate increase along with the further decline in oil. With overall equity markets down in Canada this year, we still see value in certain sectors of the stock market. Heading into 2016 we like financials, technology, and health care to continue to perform well.

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