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Michael Smedley.

Fred Lum/The Globe and Mail

Michael Smedley is executive vice-president and chief investment officer of Morgan Meighen & Associates. His focus is on Canadian equities.

Top Picks:

Seven Generations Energy Ltd. (VII-T)

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Seven Generations is one of the brightest stars in the oil and gas patch, grey market traded for fabulous gains to knowledgeable players before going public two months ago after years of accumulating massive 350,000 acre lands in the southern Montney, raising BOED production from almost nowhere last year to 40,000 per day and forecasting 100,000 in 2016. This would be a track record not known in Canada. The company admits to luck but is very smart and all eyes are on its development in the under exploited Lower Montney.

Domtar Corp. (UFS-T)

Domtar has settled down before the current market descent after a great run as it moves more to consumer-related wood supplies. U.S. dollar accounting should attract investors. And there are thoughts about its potential to spin off assets into an MLP or making other value-creating moves.

ARHT Media Inc. (ART-X)

ARHT is a newcomer. The letter H in the company name is for "holographic". Its founders include entrepreneurs Paul Duffy and Rene Bharti and Paul Anka who have surrounded themselves with advisory board members you might have heard of – Larry King, Michael Bublé, and this week no less than Carlos Slim of Mexico. They envisage many commercial applications for their holographic humans – the first is called Vincent!

Past Picks: October 31, 2013

Currency Exchange International (CXI-T)

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Then: $11.20; Now: $20.95 +87.05%; Total return: +87.05%

C-Com Satellite Systems (CMI-X)

Then: $1.85; Now: $1.12 -39.46%; Total return: -37.39%

UrtheCast (UR-T)

Then: $1.95; Now: $1.36 -30.26%; Total return: -30.26%

Total return average: +6.47%

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Market outlook:

A lot of normal year-end events are with us, along with the paralysis created by the oil price decline, on top of tax-loss selling, government-enforced selling down of registered plans, a U.S. super dollar and a modest but front-ranking U.S. economy surge. These combine against the rest of the world. One of the key items is that the rest of world functions even worse, as it has to pay for oil in U.S. dollars and therefore reality had to bring to price down. It will recover but has to get the U.S. high-cost fast decline shale fracking industry to work through its idea about U.S. self-sufficiency. One of the outcomes will be that mining sector activity could begin to see a bit of daylight. We might know later that oil is simply following metals in the cycle, but watch for new effects – oil is there in abundance but metals are into an era of difficult supply and low grade issues. Hold onto your banks.

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