Lorne Steinberg is president of Lorne Steinberg Wealth Management. His focus is deep value global equities.
Total SA (TOT.N)
Total SA is one of the best positioned integrated oil and gas companies. It remains profitable, even at current energy prices, and has the financial capacity to take advantage of the downturn by picking up cheap assets. The 6.5-per-cent dividend should be secure through 2017, by which time we expect some increase in crude prices. A great yield, with significant upside.
Morgan Stanley (MS.N)
Morgan Stanley has evolved from a leveraged Wall Street trading house into a leading institutional adviser, investment bank and wealth management firm. The shares are trading below book value and we expect earnings to grow by 50 per cent over the next 3 years, driven by wealth management. At the current price, these shares offer compelling value.
Camellia PLC (CAM.L)
Camellia is a diversified global agricultural company, producing high quality teas, nuts, citrus and other products. The company is trading at a steep discount to intrinsic value, has no net debt, as well as a long track record of rising dividends. We estimate the breakup value to be more than double the current share price.
Past Picks: Nov 4, 2014
Hewlett Packard (HPQ.N)
**Created spin-off (HPE.N) on Nov. 1, 2015**
NEW COMMENTS: Hewlett Packard shareholders now own shares in two separate companies, after the recent spin-off. We see value in both. HPE is the enterprise company, while HPQ is the personal systems/SMB company. The spin-off should create opportunities for each to accelerate earnings growth.
Then: $35.90 Now: $23.82 -33.66% Total return: -31.30%
Royal Dutch Shell (RDSb.N)
NEW COMMENTS: One of the finest oil and gas companies in the world, the shares offer a healthy dividend, strong balance sheet and trade at a discount to tangible book value. Integrated companies like Royal Dutch Shell and Total SA offer the best opportunity in the energy sector.
Then: $71.59 Now: $39.52 -44.80% Total return: -40.47%
Nippon Antenna (6930.JP)
NEW COMMENTS: An amazing value – the company has no debt, pays a 3.7-per-cent dividend and trades for less than its cash! Another example of compelling value in Japan.
Then: ¥656.00 Now: ¥563.00 -14.18% Total return: -11.44%
Total Return Average: -27.81%
There are three important themes that will impact the investment outlook for 2016: the Fed has started its rate-tightening cycle, emerging market growth is decelerating while most of the developed economies are in neutral, and government fiscal policy options are limited due to stubbornly high debt levels. Rising U.S. interest rates make it harder for emerging markets to attract investment, put pressure on U.S. corporate profits and impact equity valuations. The IMF reduced its projection for global growth (again!) and nobody fully understands whether China is experiencing some temporary issues or if there are more serious structural problems. Governments are still dealing with a debt hangover and will not be able to provide much support.
We probably have not seen the end of the market turmoil and investors should maintain a healthy cash balance in order to take advantage of opportunities if the volatility continues.