Alex Ruus, portfolio manager, Arrow Capital Management

FOCUS: North American stocks

MARKET OUTLOOK:

Broad stock markets will be volatile with relatively few gains over the coming year as the market deals with falling earnings in some sectors of the market due to a likely recession and falling share prices from last year’s profitless growth companies. NR Conservative Growth LP unitholders will experience strong returns as the fund owns companies with strong and improving fundamentals with rising earnings and cash flows. Security selection is key to making money for our clients.

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TOP PICKS:

Polaris Renewable (PIF TSX) – An undervalued Independent green power producer that trades at half the valuation of comparable companies at under seven times EBITDA and a rising 3.6 per cent dividend yield

Tourmaline Oil (TOU TSX) – Canada’s largest natural gas producer with extremely low costs and high free cash flows that trades at a discount to its intrinsic value. The company trades at a double-digit free cash flow yield and pays a regular dividend of one per cent plus special dividends currently yielding roughly 10 per cent.

Suncor (SU TSX) – One of the world’s largest oil producers and Canada’s largest operator of fueling stations that trades at a substantial discount to its intrinsic value. The company trades at over a 20 per cent free cash flow yield and a 4.5 per cent yield.

PAST PICKS: July 2, 2021

FREEHOLD ROYALTIES (FRU TSX)

• Then: $10.25
• Now: $14.05
• Return: 37%
• Total Return: 46%

ENBRIDGE (ENB TSX)

• Then: $50.15
• Now: $57.74
• Return: 15%
• Total Return: 23%

CANFOR (CFP TSX)

• Then: $28.10
• Now: $25.95
• Return: -8%
• Total Return: -8%

Total Return Average: 20%