BNN - Market Call - SIA Mentioned In Market Outlook Stephen Takacsy's Top Picks: Savaria, Jamieson Wellness, Boralex
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MARKET OUTLOOK:
Volatility has increased significantly in 2022 due to a confluence of factors. The investment environment remains very uncertain due to the after-effects of the pandemic, rising interest rates, high inflation, labour shortages and supply chain disruptions, which have worsened due to the war in Ukraine and more recently lockdowns in China. As a result, both stock and bond markets have suffered significant corrections. There is no doubt that rising rates and high inflation will slow down the economy, some parts more than others (i.e. real estate and high priced consumer discretionary).
Canada and the U.S. should be able to engineer a “soft landing” as they are coming from a good place with low unemployment levels, high amounts of savings, still low-interest rates and strong currencies. We believe that the rate of inflation will ease as the economy slows down, supply and demand for goods come more into balance, supply chains normalize and that central banks will end the tightening cycle sooner than anticipated.
Nevertheless, we are staying well-diversified in recession-resistant businesses (Telcos, Pipelines) and those benefitting from strong thematic tailwinds such as renewable energy (Boralex, Northland Power), aging demographics (CareRx, Savaria, Park Lawn, Siena Senior Living), and the digitization of everything (select technology companies). We have also been adding high-quality companies whose prices had corrected significantly such as Cargojet, Canadian Tire, and WSP Global.