Gordon Reid is president and CEO of Goodreid Investment Counsel. His focus is U.S. equities.
Top Picks:
Qualcomm Inc.
A producer of CDMA-based integrated circuits, over 70 per cent of Qualcomm's revenue comes from licensing arrangements. With one of the largest patent portfolios in the world Qualcomm benefits every time a 3G or LTE device is sold, an exciting prospect as the adoption of mobility devices explodes worldwide.
WellPoint Inc.
Wellpoint is a managed-care operator with over 36 million members. The regulatory turmoil of U.S. health-care reform has provided an excellent opportunity to invest in an organization that has the scale and diversity to overcome the hurdles of a changing health care landscape. Goodreid expects earnings of $9 (U.S.) per share in 2014.
Esterline Corp.
Esterline manufactures components for the aerospace and defence market, as well as adjacent applications in a variety of industries. While the commercial aircraft area has been a boon, defence and business in Europe have been a drag, but Goodreid believes these areas provide opportunity for future growth.
Past Picks: November 21, 2012
E.I. du Pont de Nemours & Co.
Then: $42.42
Now: $60.78
Total return: +47.96 per cent
Goldman Sachs
Then: $117.70
Now: $163.07
Total return: +40.49 per cent
Wabash National Corp.
Then: $8.08
Now: $11.70
Total return: +44.74 per cent
Total return average: +44.40 per cent
Market outlook:
While most of the credit for the equity market rally is going to the Fed's low interest rate policy, little attention is being paid to corporate earnings, which are the foundation of the market's current level. The S&P 500 index 2014 weighted earnings estimate is currently $120 (U.S.) per share, up sharply from $55 a share ten years ago and $24 a share twenty-five years ago.