Norman Levine’s Top Picks: July 23, 2021

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Norman Levine, Managing Director of Portfolio Management Corp.

Focus: Global equities


MARKET OUTLOOK:

As the market boost we saw earlier this week demonstrated, trying to predict short-term stock movements is a mouth game at best. Don’t waste your time. Think long term. In this regard, we believe that as global economies recover from lockdowns of COVID-19 (and do not recover in a synchronized fashion as many thought), earnings, stock prices and, yes. , interest rates will rise.

This does not mean that it will be a guaranteed smooth ride by any means and we expect corrections and pauses along the way, as global stock markets have come a very long way from the low in March 2020 without more. only a brief break along the way. We wouldn’t panic and sell during these corrections, when they occur, but would use them as buying opportunities, especially in areas like financials, resources and other cyclical stocks.

We believe that inflation will be higher and more sustainable than what the bond market currently seems to expect and we believe that the demand and therefore the price of many commodities will be stronger than what the market is currently reflecting. As these areas have grown into relatively small parts of most global indices (due to many years where growth stocks have significantly outperformed value stocks), we can see that these groups are doing well, unlike the major indices.

BEST CHOICES:

Norman Levine’s Top Picks

Norman Levine, Managing Director of Portfolio Management Corp, discusses his top picks: Cameco, Tourmaline Oil and Estée Lauder.

Cameco (CCO TSX)

Cameco is one of the largest producers of uranium in the world. Growing global decarbonization initiatives are expected to increase demand for nuclear power, which will be positive for uranium. The company has a strong balance sheet with more cash than debt. Over the long term, we expect Cameco to see increased contract prices for uranium as demand increases with new reactors under construction and completion. In addition, the uranium market is expected to slowly improve from currently depressed levels, aided by ongoing material production cuts and, more recently, the hoarding of current inventories by various market participants. This is very early in the uranium recovery, which bodes well for Cameco over the next few years.

Tourmaline Oil (TOU TSX)

Tourmaline is a well-managed oil and gas producer, with assets in the Montney, Deep Basin and Charlie Lake areas of British Columbia and Alberta. The company primarily provides exposure to gas (with an increasing presence of liquids) and has what we believe to be the best production and exploration profile of any company in British Columbia. Canada’s LNG exports are finally starting. Tourmaline combines an excellent land / production position with a very solid balance sheet and arguably the best management of the business.

Estée Lauder Companies (EL NYSE)

Estée Lauder is one of the world’s largest manufacturers of premium makeup, skin care, fragrance and hair care products. The company owns many brands, targeting different price points and markets, and has grown significantly through acquisitions. Estée Lauder is also a story of reopening. Makeup sales fell sharply as WFH meant women didn’t care so much about how they looked at work and scent suffered as people stayed home. These markets are already bouncing back with the reopening of economies and women returning to the office and exiting again. Skin care, on the other hand, performed quite well during the WFH. Interestingly, the lockdowns shifted much of the company’s sales from department stores to specialty stores and online, resulting in higher margins. The reopening of China brought strong sales gains, which bodes well for other geographies. The company has a large duty-free business, which has suffered tremendously from travel restrictions, and this is also expected to rebound strongly once international travel resumes.

PAST CHOICES: June 8, 2020

Norman Levine’s Past Choices

Norman Levine, Managing Director of Portfolio Management Corp, discusses his past picks: McDonald’s, Walt Disney Co and Magna International.

McDonald’s Corp (MCD NYSE)

  • Then: $ 202.65
  • Now: $ 240.61
  • Efficiency: 19%
  • Total yield: 22%

Walt Disney (DIS NYSE)

  • Then: $ 127.28
  • Now: $ 174.85
  • Efficiency: 37%
  • Total efficiency: 37%

Magna International (MG TSX)

  • Then: $ 63.76
  • Now: $ 100.72
  • Efficiency: 58%
  • Total efficiency: 62%

Average total return: 40%

MCD NYSE NOT NOT NOT
DIS NYSE Yes Yes Yes
MG TSX Yes Yes Yes


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