On September 11, 2017, Darren Sissons appeared on BNN’s Market Call to discuss recent market events and make some calls on stocks to watch over the coming quarters.
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The 'Summary'
Darren’s stock picks from November 2016 were reviewed and those selections showed solid rates of return over the past 10 months, averaging a 14% total return. Those picks included Royal Dutch Shell, TransCanada Pipeline and Nestle.
The ongoing political environment continues to frame the investment space, however, recent events are beginning to create value opportunities, sometimes in unlikely places. Darren specifically mentioned Korean equities as looking increasingly attractive, albeit for investors with higher risk tolerances.
With the increasing value of the Canadian dollar, U.S. equities are looking like they are on sale. The extremely strong GDP numbers reported recently in Canada do not look sustainable as employment growth in both energy and mining will be subdued. The major growth we witnessed in Q2 was likely just a return to mean from a very weak GDP posted in 2016.
Canada wasn’t alone in posting great Q2 GDP numbers. The Netherlands and Sweden grew at 6% and 4% respectively and much of Asia is still growing significantly faster than Canada.
Given the relative fundamentals of the Canadian economy vs. the U.S., Darren was slightly surprised by the interest rate hike in Canada on Wednesday last week, as were other commentators. The rise in interest rates was the cause of a significant rise in the Canadian dollar against the U.S. dollar, but for the reasons stated above, that strength may not endure.
The higher Canadian rates will benefit Canadian financial stocks moving forward which should benefit our preferred bank stocks, BNS and TD.
Campbell Lee & Ross' Top Picks
Darren’s pick’s this month included Alimentation Couche-Tard, Bank of America and Rotork PLC.