Greg Newman.
Greg Newman is director and associate portfolio manager at ScotiaMcLeod. His focus is Canadian dividend stocks and protection strategies.
Top Picks
Enbridge (ENB TSX)
Enbridge enjoys higher growth than its peer average yet trades at a discount. Investors benefit from dividend growth and capital appreciation while the valuation gap closes.
Magna International (MG TSX)
Magna earns a higher return on its assets yet trades at a discount to its peers on most metrics. Investors enjoy stock buy backs and dividend growth while the valuation gap closes.
Algonquin Power (AQN TSX)
Algonquin Power boasts above peer earnings growth yet trades at a below peer discount. Buy this name and enjoy what we view as a sustainable and growing 4.4-per-cent dividend while growth continues from developments, acquisitions and utility rate increases.
Past Picks: October 2, 2013
Algonquin Power & Utilities (AQN TSX)
Then: $6.38; Now: $8.89 +39.34%; Total return: +45.60%
Enerplus (ERF TSX)
Then: $17.05; Now: $17.30 +1.47%; Total return: +6.62%
Vanguard FTSE Europe ETF (VGK NYSE)
Then: $54.87; Now: $53.02 -3.37%; Total return: +0.59%
Total return average: +17.60%
Market outlook:
For this market to have the next leg up, I believe investors will either need to see European data points improve on their own (like today), or have confidence that European policy makers are willing and able to provide the right assistance to get their economy on track. A decelerating Europe pressures China and slows global growth. It also leads to a higher U.S. dollar which is a headwind for commodity producers and emerging markets.
The bulls want to run. While a positive U.S. and dovish Federal Reserve can help, it will not likely give investors the "all clear" they had a year ago without Europe trending favourably. I am constructive on markets as I believe European policy makers will eventually respond sufficiently. The speed of their response however, may dictate how bumpy the ride.
Buy companies with growing earnings and dividends that trade at multiples where the good story is not fully reflected in the price.