Don Lato.
Don Lato is president, Padlock Investment Management. His focus is North American Equities.
Top Picks:
Chartwell Retirement Residences (CSH.UN-TSX)
Chartwell is a real estate trust that indirectly owns and manages a portfolio of seniors housing communities from independent supportive living communities, through assisted living communities, to long-term care communities. Taking advantage of the strong U.S dollar, the company has recently completed the timely sale of its entire U.S. portfolio of residences to concentrate on the Canadian market. With strong demographic tailwinds behind it, Chartwell recently raised its dividend and now yields 4.8 per cent but with an extremely reasonable payout ratio of 74 per cent.
Gilead Sciences (GILD-Nasdaq)
Gilead is a research-based biopharmaceutical company whose primary areas of focus include HIV, liver diseases such as chronic hepatitis, oncology and serious cardiovascular and respiratory conditions. Its most noted success in the past year has revolved around its regimes for chronic hepatitis C, Sovaldi and Harvoni. In addition to these breakthrough drugs, Gilead has a strong pipeline of drugs particularly in oncology and trades at an extremely valuation of 10 times next year's earnings with a yield of 1.6 per cent.
Tourmaline Oil (TOU-TSX)
Tourmaline is regarded as one of the premier natural gas companies in Canada. From its IPO in 2010, Tourmaline has steadily grown its reserves and production. In its recent first quarter earnings report last week, the company confirmed that it is still on track for 2015 production of 164,500 boe/d or a 46 per cent increase over last year. With arguably the strongest management team in the industry, an exceptional balance sheet and thousands of potential drilling prospects, Tourmaline is poised for continued growth in the years ahead regardless of natural gas prices.
Past Picks: April 10, 2014
Apple (AAPL-Nasdaq) *stock split* – June 9, 2014 - 7 for 1
Then: $523.48; Now: $128.70 +72.10%; Total return: +75.36%
NCR Corp. (NCR-NYSE)
Then: $33.94; Now: $28.30 -16.62%; Total return: -16.62%
Performance Sports Group (PSG-TSX) * Used to be Bauer Performance Sports *
Then: $13.62; Now: $20.43 +50.05%; Total return: +50.05%
Total Return Average: +36.27%
Market outlook:
The U.S. market has been in a fairly narrow trading range for the last few months but has just broken through the upper end of that range to set new all-time highs on the S&P 500 index. In the near term, we are entering the fabled "Sell in May and go away" stage of the cycle. Historically, returns during this period have been less than average but in pre-election years such as this one, returns have been positive two-thirds of the times. Medium to longer term, however, Padlock remains very constructive on the equity markets and is committed to the belief that we are still in the first half of a multi-year bull market. Any weakness should be used as a buying opportunity but commitments to equities on a break out to new highs should be maintained.