Robert Gill, senior vice-president and portfolio manager at Goodreid Investment Counsel

FOCUS: Canadian equities 

MARKET OUTLOOK:

Markets are very volatile right now, and this is not surprising with so much going on in the world. The biggest disruptions right now seem to be geopolitical. If we take a look around the world right now, there is plenty of risk and geopolitical disruption.  The Middle East conflict seems to be escalating, rather than abating, Russia’s invasion of Ukraine is now in its third year and it is a U.S. election year with a lot riding on the outcome of November’s vote.

All of this means there are a lot of external factors in the political economy that have the ability to influence the market right now.

Fortunately, none of this disruption is in Canada and it remains a great place to be invested right now for three reasons. Firstly, our country is stable, both economically and politically. Secondly, inflation is slowly coming down. Lastly, the S&P/TSX Composite Index is good value compared to the S&P 500 Index.

We see opportunities in interest-sensitive stocks, which have been hit hard, these sectors include banks, utilities and telecoms. They are interest-sensitive because they offer big dividend yields, and in a rising rate environment, fixed income offers attractive investment opportunities.

Also, the energy sector has a lot going for it right now. Companies are offering large dividend yields, a return of capital through share buybacks and share prices are supported by the high price of oil.

If we want to invest successfully in this environment, we must buy high-quality companies with impressive profit margins and recurring revenue, and invest in companies that have clean balance sheets and have well-diversified portfolios. If you are looking in the right places, there is plenty of value right now in Canada. 

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TOP PICKS:

CGI (GIB.A TSX)

CGI, Inc. is one of the largest IT services companies in the world. The company services various clients in different industries as well as government and private companies. With plenty of offices around the world, CGI has impressive geographic exposure. Profitability remains high and the balance sheet is clean. The valuation is attractive after shares have pulled back somewhat in recent weeks.

BCE (BCE TSX)

A contrarian pick, BCE is a household name providing cable, internet, wireless and wireline phone communication. It also owns Bell Media and sports teams. Shares are trading off as investors shift money out of higher-yielding equities and into fixed-income assets for their greater perceived safety. The company is also facing increased competition and regulatory pressures. Meanwhile, shares trade at a multiple cheaper than the market, and offer an almost nine per cent dividend yield.

BNN Bloomberg is owned by Bell Media, which is a division of BCE.

Nutrien (NTR TSX)

As the largest fertilizer producer in the world, Nutrien is a Canadian champion. The price of potash has recently corrected from $800 to $295, and with that shares of Nutrien have pulled back from a cyclical high of $140 to around $70 now. Meanwhile, the company continues to have impressive profitability, a strong balance sheet, a nice yield of 4.2 per cent and trades at an attractive valuation multiple.