Paul Harris is partner and portfolio manager at Avenue Investment Management. His focus is North American and global equities.
Bayerische Motoren Werke AG (BMW)
BMW manufactures and sells luxury cars and motorcycles worldwide. With QE in Europe, we think that the European consumer, not unlike the U.S. consumer, will front load purchases, especially automobiles (European auto sales are still below 2007 levels). The shares trade at 7.5 times 2017 earnings and have a 4.2 per cent dividend yield.
Kraft Heinz (KHC.O)
KHC provides food services and food products which include ketchup, Kraft Dinner etc. The stock has a 2.7-per-cent dividend yield and trades at 22 times 2017 earnings. We continue to see cost cutting and organic growth through better distribution of Kraft products through the Heinz distribution network.
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 17 times 2016 earnings, and the dividend yield is 2.6 per cent.
Past Picks: August 20, 2015
Then: $42.23 Now: $66.61 +57.73% Total return: +59.43%
Element Financial (EFN.TO)
Then: $18.89 Now: $13.81 -26.89% Total return: -26.51%
TD Bank (TD.TO)
Then: $50.91 Now: $56.11 +10.21% Total return: +14.65%
Total Return Average: +15.86%
The volatility should continue as the Fed remains on hold, perhaps until 2017, and with Brexit, the U.K. economy appears to be slowing, and the outlook for China and Europe remain mixed. We continue to believe that the U.S. will be the fastest-growing economy in the developed world. We continue to think that the Canadian economy will remain flat to marginally up, even with the budget and the fiscal stimulus that the federal government introduced. The TSX has benefited from oil and the general resource rally. This has also helped the Canadian dollar. We still see value in certain sectors of the stock market such as financials, technology, and health care and utilities. We are also concerned as many countries move to negative rates. That does not bode well for global growth and inflation going forward. We continue to see global GDP growth at 2 per cent .