Jamie Murray, portfolio manager and head of research at Murray Wealth Group
Focus: North American equities

MARKET OUTLOOK

Markets have priced in the election and are slowly accepting the end of COVID-19 in mid-2021. Investors should be looking for opportunities in a “life-after-COVID” scenario with more normalized social activity. While there will be some permanent effects (more videoconference and less business travel for example), we believe life will more or less go back to normal. There is still cyclical upside to COVID-impacted names and investors should stay patient with names with valuation upside.

We continue to like technology with 28 per cent of our Global Equity Growth Fund invested in super-cap tech. We are still in early innings for cloud-based application technology and expect further penetration with Amazon, Microsoft and Alphabet taking the lion share of the computing infrastructure market. Health care and consumer discretionary provide good opportunity for long-term earnings growth as well.

TOP PICKS

Facebook (FB NASD)

Facebook proved its resiliency during the COVID-19 pandemic with third-quarter revenue increasing 22 per cent year-over-year. Revenue growth is expected to remain strong through 2022 and we believe the street is underestimating operating leverage which should lead to positive earnings per share revisions. Its R&D budget is approaching $20 billion which should ensure the company continues to grow through new features like e-commerce, payments and marketplaces.

BMW (BMWYY OTC)

BMW is emerging from COVID in its leanest shape in years. As economies recover and car-buying habits normalize, the company’s profits should rise as witnessed in its impressive third quarter with cash generation and margins improving. The company is also exiting a large investment program in electric vehicles and is now positioned to reap the benefits as sales of these types of vehicles rise. Finally, China continues to grow as the world’s largest luxury auto market when BMW is well positioned through its joint venture.

Stelco (STLC TSX)

Stelco has a very clean balance sheet thanks to its 2017 restructuring. Moreover, the company’s reinvestment in its facilities has resulted in one of the most cost-efficient operations in North America. With a cost base of $400 per ton, Stelco should be able to provide good full-cycle returns in what is a volatile industry. Currently, steel prices are over $700 per ton which is far from reflected in the company’s share price. As a kicker, the company holds a large land parcel adjacent to its Hamilton Works Steel Operation that is well-positioned for industrial real estate development and could be worth up to $5 per share.

PAST PICKS: OCTOBER 8, 2019

Mastercard (MA NYSE) 

• Then: $ 208.26
• Now: $330.75
• Return: 59%
• Total return: 60%

IBM (IBM NYSE) 

• Then: $148.39
• Now: $118.64
• Return: -20%
• Total return: -10%

Corus Entertainment (CJR/B TSX)

• Then: $5.49
• Now: $4.13
• Return: -25%
• Total return: -20%

Total return average: 10%

TWITTER: @Murray_Wealth
WEBSITE: https://murraywealthgroup.com/