Investment Editor
WHAT ARE WE LOOKING FOR?
Let's check on the latest changes Peter Gibson has made to his Focus 15 basket of Canadian stocks. Mr. Gibson is a quantitative strategist and vice-chairman of Desjardins Securities.
WHAT IS THE FOCUS 15?
The Focus 15 is a basket of 15 stocks that highlight his top long-term picks. His approach to choosing stocks is to look at many statistical measurements, but his emphasis is on profit growth and steadily improving return on equity. Last year, he expanded his list to 15 names from 10 to give the basket more diversity.
Since its inception in 2004, the Focus 10/Focus 15 basket had returned 39.6 per cent, versus 12.2 per cent for the S&P/TSX composite. Over the past year, the Focus 10/Focus 15 is down 21.2 per cent, versus 31 per cent for the S&P/TSX composite.
WHAT'S CHANGED
Last week, Mr. Gibson got a jump on some spring cleaning, switching up many of the names in the portfolio. He removed TransAlta Corp. and Emera Inc.; replaced Saputo Inc. with Jean Coutu Group Inc.; replaced Barrick Gold Corp. with Eldorado Gold Corp., Agrium Inc. with Potash Corp. of Saskatchewan Inc. and Husky Energy Inc. with Imperial Oil Ltd. He also added TMX Group Inc., BCE Inc. and Cineplex Galaxy Income Fund, leaving two cash positions, down from three previously. He believes these are the best mix of growth, value and dividend stocks in the S&P/TSX composite. Mr. Gibson removed some exposure to defensive utilities due to falling ROE, added a small amount of financial sector exposure for the first time in months, and focused commodities exposure on some higher risk, more volatile, yet higher upside names.
LATEST MARKET VIEWS
Mr. Gibson is sounding cautiously more positive about the market. "U.S. banks have gained 66 per cent over the past few weeks, as bank executives touted improved business conditions and increasing signs that the U.S. economy is stabilizing, even in this vulnerable period before U.S. housing and stimulus plans gain traction," he said in research report last week. "Nonetheless, we received positive surprises from U.S. housing this week, especially with regard to mortgage refinancing. U.S. banks broke and held key technical levels after Treasury Secretary Timothy Geithner reintroduced a detailed toxic asset plan for banks, while the six-month downtrend for TSX financials seems to have ended."
| Peter Gibson's Focus 15 | |||||||||
| $ Price | Market | Price/book | % | 12-mo. % | YTD % | ||||
| Ticker | Company nme | Mar. 27 | Weight | ROE | P/E | val/shr | Yield | total return | total return |
| POT-T | Potash Corp. of Sask. | 109.79 | 3.46% | 50.0 | 9.4 | 5.7 | 0.5 | -32.6 | 22.8 |
| IMO-T | Imperial Oil Ltd. | 45.18 | 1.18% | 43.2 | 11.1 | 3.8 | 0.9 | -15.8 | 10.5 |
| RIM-T | Research In Motion Ltd. | 55.82 | 2.94% | 42.4 | 14.5 | 4.8 | 0.0 | -52.3 | 12.8 |
| COS.UN-T | Canadian Oil Sands Trust | 25.02 | 1.29% | 38.0 | 7.7 | 2.5 | 2.4 | -35.2 | 19.5 |
| BBD.B-T | Bombardier, Inc. | 3.00 | 0.47% | 28.0 | 6.6 | 2.0 | 3.4 | -43.8 | -32.2 |
| RCI.B-T | Rogers Communications Inc. | 29.45 | 1.67% | 27.4 | 14.2 | 4.0 | 3.9 | -15.6 | -18.7 |
| X-T | TMX Group, Inc. | 36.00 | 0.29% | 26.2 | 12.8 | 3.1 | 4.2 | -2.3 | 44.5 |
| SJR.B-T | Shaw Communications Inc. | 19.91 | 0.70% | 22.1 | 17.6 | 3.5 | 4.2 | 14.1 | -6.9 |
| NA-T | National Bank of Canada | 40.75 | 0.70% | 19.3 | 7.2 | 1.2 | 6.1 | -6.2 | 32.1 |
| BCE-T | BCE Inc. | 25.17 | 2.13% | 12.6 | 11.0 | 1.4 | 3.0 | -26.3 | 1.8 |
| ELD-T | Eldorado Gold Corp. | 11.25 | 0.44% | 12.1 | 38.5 | 4.0 | 0.0 | 58.2 | 16.6 |
| PJC.A-T | The Jean Coutu Group (PJC) | 7.75 | 0.10% | 9.0 | 14.4 | 1.6 | 2.1 | -23.2 | -6.2 |
| CGX.UN-T | Cineplex Galaxy Income Fund | 15.40 | 0.09% | 6.0 | 22.6 | 1.3 | 8.2 | 1.2 | 14.5 |
| SOURCE: DESJARDINS |