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Michael Bowman, Executive Vice President & Portfolio Manager FOCUS: Canadian Large Caps & ETFs Market Outlook:
We are looking at slow growth for many years to come, and the economies of the world will face many headwinds. Couple that with 78 percent of all trades on U.S. exchanges are made by high frequency traders, and you soon realize that this time it really is different. Investors need to focus on companies with low debt and stable cash flow. Remember that many of the best performing companies pay no dividends, or very small dividends. Don't be afraid to use inverse ETFs as hedges against market declines. Look at placing stop loss orders for some of your positions, and incorporate option strategies. Investors will need every tool at their disposal. The capital markets will continue to be very volatile for much longer than we think, and the days of holding stocks forever are gone.
TOP PICKS: IQ Global Agribusiness Small Cap ETF (CROP NYSE) $26.50 close March 28
This ETF has a 1.4 percent yield. Market cap weighted global small companies engaged in the agri-business sector, including crop production and farming, livestock operations, agricultural machinery, agricultural supplies and logistics, agricultural chemicals and biofuels. A complement to the large cap agricultural ETFs. Building on the theme of rising food prices, increasing populations, and the demand for alternative fuels. 29 percent Japan, 20 percent U.S., 9 percent Netherlands, 8 percent Australia. Also China, Indonesia, and Spain. Canada 0 percent.
Vermilion Energy (VET TSX) $52.50 close March 28
Vermilion has a 4.6 percent yield. VET owns oil producing property in Canada, France, Australia, Ireland and the Netherlands. The company is a core oil holding. VET has pricing strength relative to its North American peers, attractive asset diversification, and a growing dividend. The company has strong cash flow, and looks to deliver on 2013 production guidance.
Dundee REIT (D.UN TSX) $36.65 close on March 28
Dundee has a 6 percent yield. The company missed on Q4 which was due to excess cash held during the quarter. Property operations were very solid. The portfolio is weighted towards high quality well located office properties. The company bought the remaining 50 percent of the Adelaide St. E. property in Toronto, and also 60 percent of an Edmonton property. When investors are concerned with world wide economics they tend to move to the REITS which offer yield and stability, and have been a good place to park cash.
| Disclosure: | Personal | Family | Portfolio/Fund | | CROP | Y | N | N | | VET | Y | N | Y | | D.UN | Y | N | Y | PAST PICKS: September 21, 2012 Horizon North Logistics (HNL TSX) | Then: $7.81 | Now: $5.66 | -27.53% | TR: -25.70% | Valeant Pharmaceuticals (VRX TSX) | Then: $53.35 | Now: $77.28 | +44.85% | TR: +44.85% | PowerShares Dynamic Leisure & Entertainment ETF (PEJ NYSEARCA) | Then: $23.04 | Now: $26.36 | +14.41% | TR: +14.77% | Total Average Return: +11.31% | Disclosure: | Personal | Family | Portfolio/Fund | | HNL | N | N | N | | VRX | Y | N | Y | | PEJ | Y | N | N | Follow us on Twitter: @marketcall |