Paul Harris, portfolio manager, Harris Douglas Asset Management
FOCUS: North American and global stocks
Top Picks: Alphabet, Novo Nordisk, MSCI
MARKET OUTLOOK:
Central banks around the world are in an easing cycle. The U.S. Federal Reserve should reduce rates in the December meeting by 25 basis points, however further rate reduction is unclear given some of the talk from the new administration. Things like immigration policy and tariffs may cause the Fed to hold back until they have a clear picture of the economic backdrop. The Canadian economy is in much worse shape than the U.S. and we see further rate decreases over the next several months. We think we will see a weaker Canadian dollar as well as the Bank of Canada needs to be more aggressive than the Fed in rate reduction.
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TOP PICKS:
Alphabet (GOOG NASD)
Alphabet is a top search destination on the web and provides a leading search marketing platform for advertisers and merchants. The company continues to see growth in YouTube and its ability to monetize advertising. The stock trades at 20 times earnings below the market valuation. It will generate $69 billion in free cash flow in 2024 and has no debt. Has significant secular growth form internet advertising, strong market share in search and other internet advertising segments. Google has 30 per cent share of U.S. digital ad revenue and global ad revenue is expected to reach well over 400 billion in 2024 and digital advertising accounts for more than 50 per cent of total ad spend.
Novo Nordisk A/S (NVO NYSE)
NVO-is a Danish multinational pharmaceutical company. Novo Nordisk is controlled by majority shareholder Novo Holdings A/S which holds approximately 28 per cent of its shares and a majority (77 per cent) of its voting shares. The Diabetes and Obesity Care segment includes diabetes, obesity, cardiovascular, and emerging therapy areas. The Rare Disease segment refers to rare blood disorders, rare endocrine disorders, and hormone replacement therapy. The company major drug is Ozempic and Wegovy that continue to drive revenue and earnings. We believe we are in the early stages of these blockbuster drugs and the continue research that shows the drug helps reduce heart disease, stroke, fatty liver and sleep apnea. Qzempic and Wegovy sales should be around 26 billion this rising to 41 billion next year which should lead to double digit revenue and earnings per share growth.
MSCI (MSCI NYSE)
MSCI is a provider of critical decision support tools and solutions for the global investment community. Its operating segments include index, analytics, ESG and climate, and private assets. Its indexes are used in various areas of the investment process, including indexed product creation, performance benchmarking, portfolio construction and rebalancing, and asset allocation. The analytics segment offers risk management, performance attribution and portfolio management content, applications, and services. The company is basically an oligopoly for data analytics. It has Gross margins of 82 per cent and operating margins of 53 cent.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| GOOG NASD | Y | Y | Y |
| NVO NYSE | Y | Y | Y |
| MSCI NYSE | Y | Y | Y |
PAST PICKS: NOVEMBER 20, 2023
TD Bank (TD TSX)
- Then: $85.10
- Now: $78.16
- Return: -8.14%
- Total Return: -3%
STRYKER (SYK NYSE)
- Then: US$289.29
- Now: US$387.14
- Return: 33.82%
- Total Return: 35%
Enbridge (ENB TSX)
- Then: $46.23
- Now: $60.09
- Return: 29.9%
- Total Return: 38%
Total Return Average: 23%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| TD TSX | Y | Y | Y |
| SYK NYSE | Y | Y | Y |
| ENB TSX | Y | Y | Y |