Gordon Reid is president and CEO of Goodreid Investment Counsel. His focus is U.S. equities.
Top Picks:
Boeing (BA.N)
Latest purchase Aug 2016 @ $134
Boeing is in full production and has a commercial aircraft backlog of 5,700 planes, representing over $400-billion. Visibility is good, valuations are reasonable and cash-flow is robust, supporting a 3-per-cent-plus dividend yield.
Dycom Industries (DY.N)
Latest purchase April 2016 @ $84
Dycom is a telecom services company, capturing a large share of the massive amount of work to upgrade wireline networks to accommodate greater bandwidth. Organic revenue growth in the most recent financial report was an impressive 20 per cent. Earnings are soaring, yet valuations are modest, at less than 16 times the current year's expected results.
Home Depot (HD.N)
Latest purchase Aug 2016 @ $137
Home Depot is growing, attractively priced, well managed and has multiple favourable trends supporting it. Household formation numbers are rising but are still lagging population growth. Interest rates remain low and lending standards are more relaxed than in past years. Unemployment is falling and GDP growth is steady. At 21 times earnings, Goodreid believes this issue is a buy.
Past Picks: September 30, 2015
Facebook (FB.O)
Then: $89.90 Now: $131.05 +45.77% Total return: +45.77%
Citigroup (C.N)
Then: $49.61 Now: $47.48 -4.29% Total return: -3.63%
Nasdaq Inc (NDAQ.O)
Then: $53.33 Now: $70.90 +32.95% Total return: +34.71%
Total Return Average: +25.62%
Market outlook:
The market's message is confusing some participants, but Goodreid believes it should be taken at face value. A rate hike by the Federal Reserve is unlikely in September, but when it happens, it is likely to be another one and done until well into 2017.
The earnings recession is showing signs of ending. Revenue growth has improved and valuations, given the monetary backdrop, are reasonable.