Gordon Reid, president and CEO, Goodreid Investment Counsel
FOCUS: U.S. equities
Top Picks: Citigroup, General Motors, StoneX Group
MARKET OUTLOOK:
We are all exhausted. Threats, insults, disrespect, and lies leave Canadian investors yearning for the boring days of old and U.S. investors confused, worried, and in some cases, embarrassed. Markets are roiled and correcting due to waning confidence and uncertainty, those intangibles that comprise a meaningful piece of the equity market’s valuation equation and a buoyant economy. Prior to Trump 2.0, U.S. equity markets were trading at a 15-20 per cent premium to historical valuation norms. The argument was that the economy was humming, and corporate America was efficient. Employment growth was strong, and the consumer was spending. Profit margins were near all-time highs and the promise of the AI revolution propped stocks.
However, trade wars, geopolitical tensions, and political instability, all manufactured issues, have taken the bloom off the rose. One could argue they are all likely to be transient, but trust is earned back very slowly, so it is reasonable to assume that some of the valuation reset will persist. Not surprisingly it has impacted the “growthiest” of stocks the most, particularly the Magnificent Seven. Goodreid’s underweight position in this group is paying dividends as the market resets.
All this said, equity markets must be able to cope with “events.” They come in different shapes, sizes and severity. One could argue that five years ago the COVID-19 event was far more threatening than the issues we face today. Ultimately, Goodreid’s confidence is tied to the functioning and adaptability of corporations over long time periods.
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TOP PICKS:
Citigroup (C NYSE)
Latest Purchase March 2025 at $67.
Citigroup’s stock price has had a resurgence. The argument for the past number of years has been it’s “cheap for a reason.” However, under CEO Jane Fraser’s leadership this large money centre bank is turning things around. It has pared its foreign exposure and improved its financial metrics, leading to an expectation of rapidly improving earnings. At a 24 per cent discount to tangible book value, this issue will likely continue to outperform.
General Motors (GM NYSE)
Latest Purchase March 2025 at $47.
Tariffs, tariffs, tariffs. If you think the U.S. administration has a goal of destroying a cornerstone industry, then avoid the sector. If, on the other hand, you think this is a passing event, GM is inexpensive, and an opportunity. The company is sending investors strong signals by executing on a massive buy back program and allocating capital to dividends.
StoneX Group (SNEX NASD)
Latest Purchase March 2025 at $118.
SNEX is an institutional grade financial services network with short and long-term tailwinds. Short-term, rising volatility and trading activity should lead to solid earnings growth. Long-term, market share gains and industry consolidation of smaller players will create shareholder value.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| C NYSE | Y | N | Y |
| GM NYSE | Y | N | Y |
| SNEX NASD | N | Y | Y |
PAST PICKS: March 13, 2024
Freeport-McMoRan (FCX NYSE)
- Then: US$43.41
- Now: US$39.67
- Return: -9%
- Total Return: -7%
IBM (IBM NYSE)
- Then: US$196.70
- Now: US$246.54
- Return: 25%
- Total Return: 30%
Meta Platforms (META NASD)
- Then: US$495.57
- Now: US$578.41
- Return: 17%
- Total Return: 17%
Total Return Average: 13%
| DISCLOSURE | PERSONAL | FAMILY | CLIENT PORTFOLIOS |
|---|---|---|---|
| FCX NYSE | Y | N | Y |
| IBM NYSE | N | N | N |
| META NASD | Y | N | Y |
