Dan Rohinton, portfolio manager, iA Global Asset Management
FOCUS: Canadian and global large caps
Top Picks: United Health Group, Waste Connections, Microsoft
MARKET OUTLOOK:
While we have observed a relatively robust U.S. and global economic backdrop and central banks veering towards a more bifurcated monetary stance, the pacing of this shift at various speeds raises concerns about market stability and potential shocks.
Resurgent efforts by China to stimulate its economy may appear favourable for the global economic climate. However, this comes with its own set of risks given the significant impact China has on global commodity demand, especially affecting the Canadian market. If these monetary and fiscal initiatives fail, repercussions could be negative across markets.
Indeed, we have witnessed a substantial increase in valuations across multiple yield-oriented sectors, driven by expectations for interest rate cuts.
The rise of AI continues to be a focus, with high hopes pinned on larger firms investing in artificial intelligence. While we are still searching for the “killer product” that might lead monetization into full swing, the inflated expectations concerning AI could lead to overvaluations and eventually a potential bubble.
To sum it up, the global stock market is filled with opportunities and risks. Although individual company fundamentals and macroeconomic trends may appear to strike a balance for investing, market crosscurrents and global economic complexities may lead to a choppier path than the past two years. Greater caution is therefore required when making investment decisions in the present market landscape.
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TOP PICKS:
United Health Group (UNH NYSE)
The leading diversified insurance operator in the U.S. that has been hit with several one in a hundred-year storms at the same time.
The difficult environment for operating margins has pressured profit growth over the last 12-24 months and we expect that to come under control in the upcoming year.
Valuation across the sector has significantly compressed and leaves little room for further downside from here.
Waste Connections (WCN TSX)
Diversified waste management company with operations both north and south of the border.
Waste Connections has the ability to continue benefitting from resilient solid waste growth and a positive tailwind to margins as labour costs cool down.
Microsoft (MSFT NASD)
MSFT is the most successful distributor of technology products in the world. In a diversified portfolio this stock functions as an effective proxy for global software demand and innovation.
It is the leaders in AI distribution and the co-pilot rollout will be an important driver for the stock to the upside or downside.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| UNH NYSE | N | N | N |
| WCN TSX | N | N | N |
| MSFT NASD | N | N | N |
Past Picks: JULY 25, 2024
Linde PLC (LIN NASD)
- Then: US$443.03
- Now: US$415.76
- Return: -6%
- Total Return: -6%
Mastercard (MA NYSE)
- Then: US$429.60
- Now: US$518.53
- Return: 21%
- Total Return: 21%
TRYG A/S (TRYG CPH) – Copenhagen Exchange
- Then: 147.60 DKK
- Now: 154.00 DKK
- Return: 4%
- Total Return: 6%
Total Return Average: 7%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| LIN NASD | N | N | Y |
| MA NYSE | N | N | Y |
| TRYG CPH | N | N | Y |