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bnn market call

Darren Sissons is managing director, Portfolio Management Corp. His focus is on global large caps.

Top Picks:

Corning Inc. (GLW-NYSE)

Corning is a serial dividend increaser currently yielding 2.2 per cent. The company has an excellent balance sheet, and is leveraged to the recovering U.S. consumer as they upgrade their TVs, cellphones and tablets. It is also leveraged to the European telecom fibre build-out (to the curb and to the home).

Nestlé SA (NSRGY-PK)

Nestlé is a progressive dividend increaser currently yielding 3.3 per cent. It is reducing its working capital needs, which will increase cash flow and generate larger dividends over time. The company has a good balance sheet, and global footprint, which diversifies and de-risks earnings. Its home base in safe haven Switzerland is a plus for investors looking to reduce their portfolio volatility.

Vodafone Group PLC (VOD-Nasdaq)

Vodafone has a progressive 5.2-per-cent dividend. The company has a global footprint of telecom operations active in developed and fast growing emerging markets. It also has a proven strategy of opportunistically investing in telecom companies across the globe that are later sold at a sizable profit. Given recent regulatory changes in Europe the region has commence a multi-year fibre build-out, which is expected to drive higher earnings moving forward.

Past Picks: January 30, 2014

BankUnited (BKU-NYSE)

Then: $31.44; Now: $29.49 -6.20%; Total return: -3.69%

Paychex Inc. (PAYX.O)

Then: $42.28; Now: $46.91 -10.95%; Total return: +14.79%

Tsingtao Brewing (HK: 168)

Then: $56.95; Now: $51.50 -9.57%; Total return: -8.72%

Total return average: +0.79%

Market outlook:

Market volatility is currently at high levels due largely to concerns over the rapid fall in the price of oil, the expected end of quantitative easing in the U.S. and questions around a Greek exit from the euro. Consequently, negative sentiment is dominating the market and dragging it lower. The strength of the U.S. dollar is proving helpful to Canadians with U.S. dollar and or U.S. dollar-pegged investments. Given the above, valuations are now falling back to more reasonable levels in markets outside the U.S. A Greek exit and/or continuing uncertainty around Greece's continued participation in the euro will likely provide investors with an opportunity to pick up good quality European companies at better prices in the more fiscally prudent parts of the eurozone such as Scandinavia, Germany and parts of the Benelux region. Asia, due to its high export dependency, is a second derivative trade on the U.S. and European economies and more recently on the high growth intra-Asia region. Continued strength in these markets will buoy the performance of many Asian investments. Latin America and commodity-producing countries such as Australia, Canada and South Africa offer excellent value over a three-to-five year time frame but until a floor in commodity prices is established investors with shorter investment time horizons should reduce or avoid further exposure to these markets.

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