Christine Poole’s Top Picks for December 16, 2024

Christine Poole, CEO & Managing Director, GlobeInvest Capital Management

Top Picks: Alphabet, Chubb Ltd., WSP Global

MARKET OUTLOOK:

Investors have enjoyed two consecutive years of healthy price gains in equity markets. With inflation receding, most central banks have pivoted toward interest rate cutting and prioritizing supporting economic growth, trends that are expected to continue in 2025. However, the protectionism policies advocated by U.S. President-elect Donald Trump during his campaign add a layer of uncertainty on the global economic outlook.

The post-U.S. election rally suggests brighter growth prospects for the U.S. economy accompanied by higher corporate profits. The latter must materialize to support further gains given elevated valuation levels. While the jobs market has held in relatively well, the unemployment rate has moved up, prompting the U.S. Federal Reserve to lower interest rates, albeit at a measured pace, so that it does not restrict economic growth or lead to a deterioration in labour conditions.

In contrast, the Bank of Canada has aggressively reduced interest rates since June in response to a rapidly weakening economy and spike in the unemployment rate. Going forward, a slower pace is expected to allow for the lagged impact of lower rates to be fully absorbed. The silver lining of an underperforming economy is that inflation pressures have eased much quicker than in other parts of the world. The Canadian economy, however, must contend with lower immigration levels and potentially hostile U.S. trade policy in 2025.

Macroeconomic forecasting and market timing are difficult to execute accurately. Investors should stay invested within a portfolio asset mix that meets their risk tolerance level, return objectives, and liquidity needs, rebalancing when necessary. Their equity holdings should be diversified across industry sectors and geographies, consisting of financially sound companies capable of withstanding economic cycles.

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TOP PICKS:

Alphabet (GOOGL NASDAQ)

Alphabet is a global technology company, providing the world’s leading search engine, Google, and dominates in both global desktop and mobile search engine queries. The company is a beneficiary of the shift to online advertising, offering various digital advertising tools powered by artificial intelligence. Other revenue streams include Google Cloud, YouTube, and Google Play. Alphabet provides a dividend yield of 0.4 per cent.

Chubb Ltd. (CB NYSE)

Chubb is a global property and casualty insurer, with a proven record of prudently managing risk in both underwriting and investing. Chubb continues to expand its product offerings and geographic reach, seeking attractive growth opportunities. Chubb provides a dividend yield of 1.3 per cent.

WSP Global (WSP TSX)

WSP Global provides strategic advisory, engineering and design services to clients in the Earth & Environment, Transportation & Infrastructure, Property & Buildings, and Power & Energy markets. Through strategic acquisitions, WSP has expanded its global presence with Canada representing 18 per cent of revenues, Europe/ME/India/Africa 29 per cent, Americas 37 per cent, and Asia Pacific 16 per cent. WSP is committed to its proven growth strategy of being a consolidator within a fragmented industry, continuous margin improvement, and growing organically while maintaining a strong balance sheet. WSP offers a dividend yield of 0.6 per cent.

PAST PICKS: NOVEMBER 23, 2023

Loblaw (L TSX)

• Then: $121.71
• Now: $193.75
• Return: 59%
• Total Return: 61%

Otis Worldwide (OTIS NYSE)

*Prices and returns reflect Nov. 22 as Nov. 23 was U.S. Thanksgiving*

• Then: $84.94
• Now: $97.12
• Return: 14%
• Total Return: 16%

Royal Bank of Canada (RY TSX)

• Then: $118.66
• Now: $177.13
• Return: 49%
• Total Return: 54%

Total Return Average: 44%