Mike Newton is Portfolio Manager and Director of Wealth Management at The Newton Group, ScotiaMcLeod. His focus is on North American large caps and ETFs.
Sirius XM Canada Holdings (XSR-TSX)
In addition to a 5.5-per-cent dividend, Sirius XM Canada Holdings is in the midst of some important catalysts. Continued momentum adding self-paying subscribers and progress in the used car market are fundamentally strong. The recent oversubscribed refinancing of the company's high yield debt paves the way for potential dividend increases and an increased public float. Any increased trading liquidity should prove attractive for institutional investors.
Adidas (ADDYY-OTCQX MARKETPLACE / ADS -XE)
With Adidas shares down nearly 20 per cent year-to-date, this level is attractive. Adidas is well positioned to capitalize on the European economic recovery and the upcoming World Cup – although the latest quarter should have demonstrated more signs of that which it did not. It will be important to gain market share in the U.S. running shoe market. If not, some activist investors in Europe will likely make some noise regarding recent lacklustre performance drawing attention to the name.
Google continues to execute strongly on the core areas of its business. The company is expected to generate 15 to 20-per-cent revenue growth for the next three to five years. Aggressive capital spending including the $3.2-billion (U.S.) Nest Labs purchase and the acquisition of several robotic companies should position the company for next generation technologies.
Past Picks: May 1, 2013
Then: $54.38; Now: $62.01 +14.03%; Total return: +16.75%
American Express (AXP-NYSE)
Then: $68.28; Now: $86.48 +26.66%; Total return: +28.09%
WisdomTree Japan Hedged Equity Fund (DXJ-NYSE)
Then: $46.87; Now: $45.85 -2.18%; Total return: +0.37%
Total return average: +15.07%
"Now" figures are intraday from the date of the analyst's appearance on BNN Market Call.
The sideways trend of equities to me is evidence that equities are simply digesting last year's strong gains and that it is not related to anything more sinister. As we head into the summer months, the direction of leading economic indicators is typically the best gauge of market returns and PMI's continue to remain in a positive trend. This should eventually result in a steady flow out of cash and bonds into stocks. Our portfolio composition will continue to favour companies with price stability and quality of earnings but we will also be buying the dips on higher beta names during their current correction. Having said that, we will continue to employ Stop-Loss controls in the event the economy slips into recession – even though it is a risk very few see coming to fruition we must always remember that anything can happen.