Mike Newton is Portfolio Manager and Director, Wealth Management at The Newton Group, ScotiaMcLeod. His focus is North American large caps and ETFs.
Top Picks:
Starbucks Corp.
With fears about fourth-quarter comparable-store weakness at Starbucks realized and behind us, Starbucks still represents one of the most attractive global large-cap investment opportunities. The recent 15-per-cent correction from $82.50 to $70.50 is attractive to me. Starbucks is benefiting from an outperforming high-end consumer and is making significant investments in convenience and the mobile experience.
Boeing Co.
Did Boeing just become a bargain? In my view, the negative reaction to the lower-than-expected FY14 guidance was overdone. The recent 16-per-cent correction from $144.57 at $121 is attractive to me. Boeing is currently production-constrained rather than demand-constrained. Because the barrier of entry is so large in the industry, they are likely to keep customers through this backlog.
Alimentation Couche-Tard
The shares have performed well in a weak stock market. I like that. Couche-Tard has strong exposure to the recovering European economy and is enjoying an improving balance sheet which is potentially supportive of another large acquisition. Europe represents 35 per cent of Couche-Tard's revenue and gross profit.
Past Picks: May 1, 2013
Aflac
Then: $54.38; Now: $61.73; Total return: +15.54%
American Express
Then: $68.28; Now: $85.69; Total return: +26.60%
WisdomTree Japan Hedged Equity Fund
Then: $46.87; Now: $46.13; Total return: +0.99%
Total return average: +14.38%
Disclosure: | Personal | Family | Portfolio/Fund |
AFL | n | n | n |
AXP | y | y | y |
DXJ | n | n | n |
Market outlook:
The entire investing community was looking for a pullback but had no specific reason for one – then they chose the emerging markets as the reason. The recent weakness in some economic data has been tainted by severe weather and is not indicative of a momentum shift in the economy. While businesses are still somewhat cautious, the corporate earnings recovery appears to be intact. This business expansion has a long way to go before the next downturn in both the economy and the earnings growth cycle. A transitory market correction and not a "bear market" is likely under way. Stay the course, especially since the equity markets appear oversold and will soon initiate a counter-trend rally.