Ross Healy, chairman at strategic analysis corporation; portfolio manager at MacNicol & Associates Asset Management

FOCUS: North American large caps

Top Picks: Fortuna Mining, Power Corporation, Oceana Gold

MARKET OUTLOOK:

1. Markets, notably the S&P 500 Index and the NASDAQ 100, are historically very expensive, and how the newly incumbent political authorities would deal with market weakness is one critical question.
2. The U.S. balance sheet is extremely weak, and the global economy is not much better. Cutting taxes as the Republicans may wish is therefore highly risky. The politicians may have grasped the implications of their economic conundrum, but their potential constructive options are very much a mystery.
3. Donald Trump can best be described as a loose cannon, changing direction and his convictions, almost depending on the day of the week. Facing the possibility of policy U-turns at any time, let alone daily, makes business forecasting and therefore business investment planning hazardous. A tariff war has major risks for the inflationary outlook and the health of the economy itself, as history has clearly shown.

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TOP PICKS:

Fortuna Mining (FVI TSX)

Silver stocks are lagging the golds and there will be a catch-up period ahead. Maybe not tomorrow or next week, but if gold moves, as I suspect, then silver will follow. The stock has superb upside potential as we measure it and has been bashed down by an analyst who sees a wart and extrapolates it to the entire company. That is always nice to see as it gives us a chance to buy in more cheaply than otherwise would have occurred.

Power Corporation (POW TSX)

The stock has a decent dividend yield of 4.6 per cent,a good balance sheet, and excellent upside potential. And the shares have been much higher in the past when Paul Demarais Sr. was running the company, and he did leave behind an excellent platform for growth and expansion. His boys, however, were content to let things go as they might, and were certainly not interested in doing all the work needed to actually continue to grow the company. Eventually shareholders grew tired of them and persuaded them to hire professional management that might use that platform to do what it was intended for. That was a little while ago now, and it may well be getting time when those new efforts will pay off for shareholders.

Oceana Gold (OGC TSX)

The company operates in politically stable countries, has a very strong balance sheet, and excellent upside potential for a gold company. The reason that I say “for a gold company” is that analysts are typically very slow to mark up its earnings forecasts in rising bullion markets, so when they actually do, it tends to stand out by a mile when I look at our valuation charts. In these highly volatile, and politically risky times, where very weak national balance sheets prevail, every portfolio should own some gold and preferably gold stocks, which are a cheap and leveraged way to play bullion itself.

PAST PICKS: JULY 9, 2024

Alamos Gold (AGI TSX)

• Then: $22.80
• Now: $34.24
• Return: 50%
• Total Return: 50%

Peyto Exploration and Development (PEY TSX)

• Then: $14.41
• Now: $15.30
• Return: 6%
• Total Return: 12%

BCE (BCE TSX)

• Then: $43.01
• Now: $34.33
• Return: -20%
• Total Return: -16%

Total Return Average: 15%

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