Barry Schwartz, chief investment officer and portfolio manager, Baskin Wealth Management

FOCUS: North American large-cap stocks 

MARKET OUTLOOK:

Investors in quality companies have had spectacular gains over the past 15 months as North American markets recovered all their losses from the painful drop in 2022. For those expecting further gains from here, one really needs to see strong earnings results as it appears that interest rates in the U.S. will not be cut in 2024.

The good news is that analysts expect decent organic revenue growth, rising profit margins and double-digit earnings growth from S&P 500 Index companies going out to year-end 2026. It is easy to see why; market leaders such as Microsoft, Nvidia, Amazon, Google, Netflix, Meta, Eli Lilly and others are expected to post very strong results going forward. The Canadian market has perked up recently because of stronger commodity prices and the expectation that the Bank of Canada will be forced to cut rates faster than the U.S. We remain fully invested in a portfolio of high-quality North American companies.  

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TOP PICKS:

Alimentation Couche-Tard (ATD TSX)

2024 has started off rough for ATD. Lack of volatility in fuel margins combined with a low-end consumer that is spending less on consumables is expected to hurt its results in the short term. These short-term issues have created an opportunity for long-term investors to start in a position in one of the best compounders in Canada.

Restaurant Brands International (QSR TSX)

At its most recent investor day, Restaurant Brands laid out its game plan to compound its earnings at a double-digit rate over the next five years. The company is spending aggressively to renovate its Burger King franchise as well as adding new stores across the globe to its Tim Hortons, Popeye’s and Firehouse Subs brands. We trust the management team, led by its chairman, Patrick Doyle, to deliver on its promises.

Tourmaline Oil (TOU TSX)

With natural gas near its lowest price ever, Tourmaline is a contrarian investment. We see a much brighter future because of increased natural gas demand from LNG, electrification of the grid and a return to more normalized winter weather in North America. Even with the depressed natural gas price, Tourmaline has weathered the storm and should deliver special dividends to investors in 2024.

PAST PICKS: JANUARY 4, 2023

Apple (AAPL NASD)

• Then: US$126.36
• Now: US$168.75
• Return: 33%
• Total Return: 34%

BlackRock (BLK NYSE)

• Then: US$721.90
• Now: US$797.35
• Return: 10%
• Total Return: 14%

Costco (COST NASD)

• Then: US$456.56
• Now: US$707.12
• Return: 55%
• Total Return: 60%

Total Return Average: 36%