Michael Sprung is president, Sprung Investment Management. His focus is Canadian large caps.
Manulife Financial (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. Going forward, we anticipate that core earnings growth will continue to stem from the Asian operations as well as from initiatives in the U.S. and Canada. With its strong capital base and improving profitability, dividend increases are likely within the next few quarters. Manulife will be reporting earnings on May 7.
AGT Food and Ingredients (AGT-TSX)
AGT is a leader in pulse processing for export and domestic markets. The company has had notable success in diversifying into food ingredients, an area that is facing increasing global demand. 2016 has been declared by the United Nations to be the International Year of the Pulse. This designation will serve to highlight the opportunities for AGT as demand for pulse ingredients expands.
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. The company has been a consolidator in North America and is well positioned to participate in fleet renewals. Pricing has been improving and the company's backlog has been expanding. 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: May 8, 2014
Alaris Royalty (AD-TSX)
Then: $28.40; Now: $35.24 +24.08%; Total return: +29.94%
Then: $6.08; Now: $6.97 +14.64%; Total return: +17.46%
George Weston (WN-TSX)
Then: $81.11; Now: $102.04 +25.80%; Total return: +28.16%
Total return average: +25.19%
Global stock markets continue to advance despite investors' concerns with respect to geopolitical turmoil in Asia, the Middle East and Eastern Europe. Since the financial crisis in 2008, total global debt has increased by over 40 per cent, or $57-trillion. This massive increase in debt has been a consequence of the low interest rate environment and various programs of quantitative easing by a number of central banks. In Canada, consumer debt levels have been highlighted as a concern by government officials and the fallout of lower energy prices continues to reverberate through the economy. Advancing markets have resulted in higher valuation levels. Investors should be cautious in this environment but be prepared to take advantage of any pullbacks in the market.