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Norman Levine.Fred Lum/The Globe and Mail

Norman Levine is managing director of Portfolio Management Corp. His focus is on North American large caps.

Top Picks:

BankUnited (BKU NYSE)

BankUnited is a Florida-based commercial bank with operations in both Florida and the New York metropolitan region. In a former life, BankUnited was a failed Florida bank that collapsed during the housing bubble. Now scrubbed clean with substantial excess capital, the bank is Florida's second biggest by deposits and has $15.0-billion (U.S.) in assets. The bank is run by John Kanas of North Fork Bank fame. While it is growing quickly through loan growth as both New York and Florida are among the best real estate markets currently in the U.S., it will also benefit when interest rates begin to rise.

BHP Billiton (BHP NYSE)

BHP recently announced a SpinCo, which will spinout all assets deemed non-core. The likely proceeds for existing shareholders will be dividend shares of the new subsidiary. The improving global economy is driving a better outlook for the company's key minerals as the emerging markets, not just China, continue to demand copper, iron ore and coal to support infrastructure build outs and to power electrical utilities. Additionally, the Jansen Potash business here in Canada will become an increasingly important part of the global food value chain moving forward. The company has the strongest balance sheet of the major miners, regularly grows its dividend (currently yields 5.6 per cent), and a slimmer, more focused company is expected to support an improved operating performance moving forward. We expect the slimmer BHP to have higher EPS growth than the current BHP. We would be sellers of the SpinCo and would reinvest the proceeds in additional BHP shares.

SNC-Lavalin (SNC TSX)

SNC is one of the world's premiere engineering companies. Under new senior management, it has emerged from its scandal of a couple of years ago a much better run company. New CEO Robert Card has cleaned the company up, sold AltaLink for $3.2-billion and has announced that its stake in Highway 407 is up for sale. In addition, it has acquired British engineering firm Kentz, which adds higher margin business and gives more heft to its oil and gas division. All the while, new business has been coming unabated despite the past scandal.

Past Picks: September 3, 2013

Bank of Nova Scotia (BNS TSX)

PAST COMMENTARY: Bank of Nova Scotia is the only Canadian bank in our portfolio. We bought it because it has the smallest domestic footprint of the Big Six banks and the largest foreign exposure, with most of it in South America and Asia, strong growth areas. We like its growing wealth management business and we also like its dividend, currently yielding 4.2 per cent, which was just raised last week.

Then: $58.57; Now: $72.07 +23.05%; Total return: +27.92%

Corning (GLW NYSE)

PAST COMMENTARY: Corning's businesses (LCD screens, solar/silicon, medical and telecom) have all moved off the bottom and are recovering nicely. The solar/silicon areas are linked to construction activities and telecom is linked to the roll-out of fibre-to-the-home strategies. It has a very strong balance sheet and has increased its dividend three times in the past 18 months and currently yields 2.7 per cent.

Then: $13.92; Now: $21.29 +52.95%; Total return: +56.14%

Northern Property REIT (NPR.UN TSX)

PAST COMMENTARY: Northern Property is primarily a multi-family residential real estate investor REIT in Northern Canada and Newfoundland, mainly in resource areas. The stock fell out of favour earlier this year after the company exited the seniors housing business as it did not reinvest the proceeds immediately, but has chosen to invest the money only where it could find value and future growth and has chosen a policy of selective acquisitions and new developments. Then there was further weakness when the REIT sector fell out of bed over rising interest rates. We feel it was overdone and that NPR is great value here. With a payout ratio of only 77 per cent, there is much potential upside to its distributions (current yield 5.8 per cent).

Then: $26.59; Now: $29.45 +10.76%; Total return: +17.12%

Total return average: +33.73%


Market outlook:

We like the long-term outlook for equities as economies in North America are improving and Europe is trying very hard to get its economies moving. Valuations are much better in currently shunned emerging markets. Short term, however, we think markets in developed countries are fully valued and we would not be surprised by a much needed and welcomed correction.