David Burrows, President and Chief Investment Strategist, Barometer Capital Management
Focus: North American Large Caps
Top Picks: BWX Technologies, Tech Resources, Uber Technologies
Market Outlook:
The barometer remains positive on US, Canadian and global equities throughout 2024. While we were in a seasonally tricky period until mid-October, equity markets have been expanding since early June, with SPX components up more than 70 percent of the index this year. . Not only does this indicate a healthy environment for intermediate returns, but it also suggests that equities are likely to be more resilient to bad news or mixed economic data in the near term.
Global liquidity, (rate cuts) and easy economic conditions will support asset prices, while income projections and credit conditions for 2025 suggest a soft landing in the general economy. With positive conditions across a wide range of sectors and themes in US markets, the MSCI All World Ex. The US and Canada are starting to outperform for the first time in a decade. This opens up wider investment and diversification opportunities for investors for the next economic cycle.
From a sector perspective, financials, industrials, materials and dividend growth-oriented securities led the way with firm support from high dividend-paying groups such as pipes and utilities as rates stabilised. The barometer has been overweighting these groups throughout the year and will continue to add.
Barometer has also added global exposure in early 2024, including Japan, India, Latin America and most recently China.
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Top picks:
BWX Technologies (BWXT NYSE)
In a world where baseload power supply needs to be expanded, nuclear is the most likely source. BWX has been operating and supporting small nuclear reactors for the US Navy since 1958 and has developed safe, reliable technology that can be expanded to commercial markets. As one of the most important suppliers to Ontario Power Generation, it has proven to be a candidate for accelerating commercial expansions, backed by long-term government contracts in their core business.
Tech Resources (TECK.B TSX)
The world is short on new sources of copper supplies needed by the defense industry, data centers and EVs. Teck.B has the world’s newest large-scale copper mine and has been ramping up operations for a year now. The company is likely to increase cash flow as production ramps up and copper prices remain firm in the next business cycle. As the rate-cutting cycle begins, the sector is likely to lag as materials perform well in loose economic conditions.
Uber Technologies (UBER NYSE)
For investors looking for secular growth, UBER is profitable and is expected to grow earnings and cash flow significantly over the next two years. In the long term, autonomous vehicles and alternative delivery solutions are likely to be important drivers of efficiencies.
| Disclosure | Personal | the family | Portfolio/Fund |
|---|---|---|---|
| BWXT NYSE | Y | Y | Y |
| TECK.B TSX | Y | Y | Y |
| UBER NYSE | Y | Y | Y |
Past Options: February 27, 2023
JPMorgan Chase (JPM NYSE)
- Then: US$142.16
- Now: US$208.11
- Return: 46%
- Total return: 52%
Stantec (STN TSX)
- Then: $79.40
- Now: $108.81
- Return: 37%
- Total Return: 39%
ATS Corporation. (ATS TSX)
- Then: $54.92
- Now: $39.66
- Return: -28%
- Total return: -28%
Total Return Average: 21%
| Disclosure | Personal | the family | Portfolio/Fund |
|---|---|---|---|
| JPM NYSE | Y | Y | Y |
| STN TSX | Y | Y | Y |
| ATS TSX | N | N | N |
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