Michael Smedley.Fred Lum/The Globe and Mail
Michael Smedley is executive vice-president and chief investment officer at Morgan Meighen & Associates. His focus is on Canadian equities.
Top Picks:
Easyhome Ltd. (EH TSX)
The company is acquiring great new vigour arising in its financial lending division now surpassing revenues from its now stable original business in appliances rental. (Owned by me)
Mitel Networks Corp. (MITL NASDAQ)
The old technology name of growing strength and in international leadership positions is still undertaking the absorption of the high quality Aastra business which is similar and has compatible technologies. (Mitel is owned by me and the Smedley Special Opportunities Fund)
Gear Energy (GXE TSX)
A newcomer to the junior oil and gas list a few months ago, this heavy oil company in the 8-10,000 boed range was highlighted in my office recently by one of the Calgary sector veterans – Dan Tsubouchi – who heads the Haywood team after years with GMP. Dan stimulated my awareness of the great Montney play, waterflooding and other techniques which provide a certain edge for western Canada over the U.S. (Gear is held by me and the SSOF)
Past Picks: July 18, 2013
George Weston (WN TSX)
Current commentary: This group tends to be a personal long-term hold, with huge power and cash flows in consumer retail, bakery business and now in continuing ownership of property partly transferred into the REIT established last year.
Then: $85.04; Now: $87.68 +3.10%; Total return: +5.25%
Cipher Pharmaceuticals (DND TSX)
Current commentary: Cipher was actually sold by the SSOF on an announced intended entry into a generic form of a Cipher product when patents expire in a couple of years. I kept it but I seldom sell stocks other than for tax purposes and a slight pruning of profits. The violent retreat in Cipher is typical in the market these days and early recoveries often occur. Investors should realize that managements have to try hard to improve their operations and often succeed. I did make a partial sale in Cipher on a personal basis and I have bought more a little below the present price.
Then: $5.92; Now: $9.25 +56.25%; Total return: +56.25%
First Majestic Silver (FR TSX)
Current commentary: A well-run and important Mexico-based silver producer with several mines. It is back on track and has been rising after a brief earnings downturn. Historically, the company is a better operator than most silver companies. There is value in silver which some believe is underpriced relative to gold at this time.
Then: $12.55; Now: $11.69 -6.85%; Total return: -6.85%
Total return average: +18.22%
Market outlook:
When you are at ground-zero in the mid-summer doldrums it is difficult to predict anything other than an improvement in stock trading volumes, company revenues and earnings when everyone returns and we enter with relief the darkness of the great northern hemisphere winter. We might have to sustain our livelihoods without high volumes for an extended period and I have yet to work out why most of the bits of the market that trade higher are ETFs as a class and not stocks as a class. Perhaps all it means is that ETFs are now nearly as numerous as the underlying stocks. Positive, if it is positive, is that interest rates will continue to stay low for an extended period, it seems. Positive is that gas looks at least stabilized for the short-to-medium term, oil looks stable to strong and the western Canadian energy sector looks ready for renewed strength, even outclassing the U.S. quick decline miracle fracking industry. Overall it just makes sense to stay long in good companies.