John Stephenson is president and CEO, Stephenson & Company Capital Management. His focus is North American large caps and resource stocks.
Vodafone (VOD-Q) – Last bought on Aug. 25, 2016 for $33.17
Vodafone pays a strong dividend at approximately 6.7 per cent. It is the second-biggest cellphone provider in Germany, and the U.K. only represents 10% of its value. It has a better valuation than its U.S. peers.
*Short* Shake Shack (SHAK-N) – Shorted on Sept. 12, 2016
Shake Shack's valuation is very stretched at 70 times price-to-earnings. We have limited insights into when any meaningful economic rebound will begin; the company's earnings guidance is very muted. It faces tougher comparisons with a resurgent McDonalds and slowing same store sales.
Medtronic (MDT-N) – Last bought on August 25, 2016 @ $84.60
The company can grow EPS at double-digits over next five years. MDT should be able to grow the top line at mid-single digits. Increased access to international cash should unlock value for shareholders.
Past Picks: Oct. 13, 2015
- We sold on Dec. 23, 2015
- The company had had a good run, and it started to roll over as consumer discretionary stocks had started to run out of steam
- It’s a high-quality name but has not been working for a while
Then: $62.91 Now: $55.15 -12.33% Total return: -11.39%
- We sold on July 29, 2016
- We had a large allocation to financial stocks, and in a lower-for-longer interest rate environment, it was time to exit
- It was part of a broader culling of financial names in our fund
Then: $47.88 Now: $44.52 -7.02% Total return: -3.64%
Mondelez International (MDLZ-Q)
- We sold on Feb. 5, 2016
- It is a high-quality name that had been underperforming our fund for a while
- Consumer discretionary names were looking toppy at the time
Then: $44.84 Now: $43.16 -3.75% Total return: -2.59%
The Federal Reserve's recent policy statement has highlighted that we are going to be lower-for-longer in terms of interest rates. Investors should continue to over-weight income-producing securities in their portfolios and reduce their exposure to financials and growth-oriented securities.