Michael Sprung is president of Sprung Investment Management Inc.
Michael Sprung is president, Sprung Investment Management. His focus is on Canadian large caps.
Top Picks:
Manulife Financial Corp. (MFC-TSX)
Manulife is a leading Canadian-based financial services group with operations in Asia, Canada and the United States. Over the past five years, the company has made tremendous strides in de-risking the balance sheet and improving profitability through increasing wealth management operations as well as redirecting the mix of products sold. The insurance companies will be amongst the beneficiaries should interest rates start to rise. MFC has one of the strongest capital bases in the industry. The recent purchase of New York Life's Retirement Plan Services business, while exchanging a part of a portfolio of John Hancock's life insurance, is positive and reinforces the shift into ongoing service areas.
Canadian Natural Resources (CNQ-TSX)
Canadian Natural Resources is one of Canada's leading senior producers of oil and gas. In the current environment, investors should be positioning their exposure in the energy sector to the stronger, better managed firms that have the wherewithal to survive through the downturn and take advantage as weaker companies are forced to dispose of assets or sell at bargain prices. CNQ has an enviable balance sheet and extremely well regarded management. The recent falloff of the stock price presents a good place to establish an initial position in this company.
New Flyer Industries (NFI-TSX)
New Flyer Industries manufactures and assembles transit buses in Canada and the U.S. as well as providing after-market services. Third quarter results were affected by fewer deliveries as a result of delays in inspections. The company has been a consolidator in North America and is well positioned to participate in fleet renewals. New Flyer will be a beneficiary of the improving economy in the U.S. and the strong U.S. dollar as about 80 per cent of their revenues stem from the U.S.
Past Picks: December 11, 2013
HudBay Minerals (HBM-TSX)
Then: $7.71; Now: $9.74 +26.33%; Total return: +26.60%
Encana (ECA-TSX)
Then: $19.17; Now: $15.27 -20.34%; Total return: -19.13%
George Weston (WN-TSX)
Then: $76.72; Now: $97.73 +27.39%; Total return: +29.89%
Total return average: +12.45%
Market outlook:
Investors in Canada have been focused on the turbulence in the energy sector since November and which continues in the new year. Canadian markets are not alone in experiencing pressure in stocks and commodity prices while markets in the U.S. have gone in the opposite direction as that economy continues to exhibit healthier expansion characteristics. We anticipate that volatility will increase as the geopolitical and economic concerns in Europe and Asia continue to weigh on market sentiment. In 2015, global trade and environmental negotiations will also factor into market sentiment. This environment should provide value investors with good opportunities to identify reasonably priced securities and re-balance their portfolios to grow over the next business cycle.