Bruce Campbell is president and portfolio manager, Campbell, Lee & Ross. His focus is Canadian large caps.
Recent purchases were in the $36 range.
A U.S., East Coast, retail bank that with the recent pullback trades at less than 12x forward earnings and a 3-per-cent yield. Will benefit on spread from higher rates and the U.S. economic recovery.
Concordia Healthcare (CXR.TO)
Recent purchases are at $96-98
Concordia is a fast-growing health-care company. It just announced the purchase of Andipharm which adds 190 products in 100 companies. The stock has pulled back as there is an equity raise coming but the transaction is transformational and we believe there is a 20-per-cent return now in the stock without major synergies from the deal.
Walt Disney (DIS.N)
Disney is a media and consumer conglomerate with many different business, cable, TV, theme parks, movies, etc. Star Wars comes out in December and will affirm Disney's stature in both movies and associated products that are already being sold. The stock pulled back more than the market recently due to concerns on the growth for cable TV (ABC and ESPN) but we think this is hugely overdone and you get to buy Disney on sale for one of the rare times it is possible.
Past Picks: September 12, 2014
Western Forest Products (WEF.TO)
Then: $2.46; Now: $1.79; -27.24%; Total return: -24.49%
Tourmaline Oil and Gas (TOU.TO)
Then: $50.86; Now: $30.74; -39.56%; Total return: -39.56%
Manulife Financial (MFC.TO)
Then: $22.25; Now: $20.25; -8.99%; Total return: -6.30%
Total Return Average: -23.45%
Assuming this was a correction in an ongoing bull market, there are typically two ways the bull market can resume. The first is the natural resumption post the August 24 lows. If this occurs, we do not expect it to occur in a straight line as the volatility is here to stay in the short-term due to the damage done to investor sentiment. In other words, more roller-coaster trading days with net higher closes. The other way a bull market has resumed in the past after a fast correction is to retest the lows. This has happened six times in the past 40 years – in 1978, 1979, 1987, 1998 and more recently 2011 and 2012. In these cases, the retest usually occurs within two to eight weeks. As this correction occurred in August, an expected retest (if it does happen) would likely occur in the first week of October. The focus short-term is on the Fed and whether they raise rates on Thursday. If so, we think that would be a trigger for markets to rebound (albeit after a possible negative immediate reaction). Not clear cut so be ready but have some cash to be ready to spend.