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Jamie Murray of Murray Wealth Group.The Globe and Mail

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Money manager Jamie Murray believes recession expectations have already been priced into some stocks, making it a good time to buy.

“Some companies have seen their share prices fall dramatically, even though their near-term outlook hasn’t changed,” says Mr. Murray, portfolio manager and head of research at Toronto-based The Murray Wealth Group Inc., which manages about $240-million in assets.

“We like to hold companies that we think will take market share during recessions,” adds Mr. Murray, who helps oversee the firm’s Global Equity Growth Fund.

The fund’s top five holdings are Google parent Alphabet Inc. GOOGL-Q, pharmaceutical giant AstraZeneca PLC AZN-Q, Canadian auto parts maker Linamar Corp. LNR-T, Microsoft Corp. MSFT-Q and Facebook parent Meta Platforms Inc. META-Q.

The fund has returned 25.4 per cent over the past year, driven by its large concentration of big tech names. Its three-year annualized return was 14 per cent and its five-year annualized return was 11.3 per cent. The performance data are based on total returns and are net of fees as of Sept. 30.

The Globe and Mail spoke with Mr. Murray recently about what he’s been buying and selling and the Canadian stock he wished he owned.

Describe your investing style.

We are growth investors. We like to buy companies at attractive prices, always with a view of earnings growth. We have our fair share of global leaders in sectors like technology and health care that can create new products and sell them worldwide. In recent years, we’ve also shifted a bit more to industrial and some commodity companies.

What is your take on the current market environment?

Canada appears to have slipped into a shallow recession in the third quarter, according to recent data. We think we’re getting closer to a recession in the much larger U.S. economy. It’s probably coming sometime in 2024. Recessions always come when supply exceeds demand. We didn’t think a recession was coming a year or two ago – when others were calling for it – because we saw so many supply constraints in sectors such as real estate and auto. It might not be a deep recession, but we expect slower growth.

What have you been buying lately?

One stock we’ve been adding to in recent weeks is RTX Corp. RTX-N, one of the world’s largest aerospace and defence manufacturers. It makes engines for Airbus and has a big parts business. The stock recently dropped by about 25 per cent on news of a recall of some of its engines, which will have a short-term financial impact, but we see very strong demand for its products longer term within the aerospace and airline industry. The defence industry is also poised to grow, given the conflicts in different parts of the world.

Another stock we bought in June and added again in October is retailer Target Corp. TGT-N. The stock surged during the first couple of years of the pandemic when people were spending more time at home, but that trend reversed in 2022 when everyone started travelling again and going out to concerts and restaurants. The company suffered from an oversupply of inventory during that time. The earnings got beat up, but we expect fairly consistent growth for the next three to four years as its inventory normalizes alongside consumer trends.

We’ve also been buying Meta Platforms on its recent dip. Its latest earnings show the company has further reined in expenses. We think earnings estimates are going to move substantially higher in the near term. Seeing the stock down 10 to 15 per cent in the past month, when earnings estimates are moving higher, means the shares are valued much more attractively.

What have you been selling?

We’ve been trimming some big technology names, specifically Alphabet and Microsoft. They’re still some of our largest positions, but we decided to take profits after their huge run-up so far this year. Both stocks are up about 40 per cent year-to-date.

We’ve also trimmed some of the energy stocks we added in March 2022 after Russia invaded Ukraine. We didn’t see the expected impact on global production. So, now we’re using the strength that we’re seeing in oil prices today – which we think is mostly driven by the OPEC cuts that could be reversed at any point in time – to trim some names in the sector such as Canadian Natural Resources Ltd. CNQ-T, Whitecap Resources Inc. WCP-T and BP PLC BP-N. We’re not bearish on these companies; we see a smaller upside than other companies we invest in.

Name one stock you wished you owned or didn’t sell.

Dollarama Inc. DOL-T is a stock I wish I owned. The company went public in 2009. I was on the sell side then, and our consumer analyst laid out exactly why everyone should own the company, including its strategy to increase prices over time. It was a compelling story. I bought the shares and made about 15 per cent in a month. Then I sold them for around $30. The stock is now trading at about $94 after a couple of stock splits. So, I regret selling that one so quickly.

What advice do you have for new investors?

Stay diversified. We often hear investors making life-changing money on one trade or idea. But, some investors lose everything by being too concentrated. So, having a mix of investments in a broader portfolio is important.

This interview has been edited and condensed.

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