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McMurtry Investment Report – Portfolios (May 2017)
Income | Growth | |||
Cash | Alterna Bank – High Interest Savings (1.9% current rate) | Alterna Bank – High Interest Savings (1.9% current rate) | ||
Bonds | iShares XSB Short Term | iShares XSB Short Term | ||
iShares XFR Floating Rate | iShares XFR Floating Rate | |||
iShares CBO 1-5 Ladder Corp | iShares CBO 1-5 Ladder Corp | |||
iShares CLF 1-5 Ladder Gov’t | iShares CLF 1-5 Ladder Gov’t | |||
Preferreds | Security | Dividend Yield % | Security | Dividend Yield % |
Enbridge Pfd V Enb.pr.V US | 4.21 | Enbridge Pfd V Enb.pr.V US | 4.21 | |
Horizons Active Mgt. Pfd HPR | 4.13 | Horizons Active Mgt. Pfd HPR | 4.13 | |
Common Stocks | Security | Dividend Yield % | Security | Dividend Yield % |
Financials | Royal Bank RY | 3.72 | Royal Bank RY | 3.72 |
Sun Life SLF | 3.48 | Sun Life SLF | 3.48 | |
JP Morgan JPM US | 2.30 | JP Morgan JPM US | 2.30 | |
Bank of America BAC US | 1.29 | Bank of America BAC US | 1.29 | |
Manulife MFC | 3.17 | Manulife MFC | 3.17 | |
T. Rowe Price TROW US | 3.22 | T. Rowe Price TROW US | 3.22 | |
iUnits US Regional Banks IAT US | 1.49 | iUnits US Regional Banks IAT US | 1.49 | |
Visa V US | 0.72 | |||
First Data FD US | 0.00 | |||
Energy | Suncor SU | 2.78 | Suncor SU | 2.78 |
Freehold FRU | 4.42 | Freehold FRU | 4.42 | |
Whitecap WCP | 2.89 | Whitecap WCP | 2.89 | |
Torc TOG | 4.04 | Torc TOG | 4.04 | |
Pembina Pipe Lines PPL | 4.69 | Pembina Pipe Lines PPL | 4.69 | |
Inter Pipeline IPL | 5.83 | Spartan SPE | 0.00 | |
Materials | Agnico Eagle AEM | 0.83 | Agnico Eagle AEM | 0.83 |
Franco Nevada FN | 1.26 | Franco Nevada FN | 1.26 | |
Lundin LUN | 1.65 | |||
Trevali Mining TV | 0.00 | |||
Roxgold ROXG | 0.00 | |||
Industrials | New Flyer Ind. NFI | 1.87 | New Flyer Ind NFI | 1.87 |
WSP Global WSP | 3.02 | WSP Global WSP | 3.02 | |
Canadian Pacific CP | 0.96 | Canadian Pacific CP | 0.96 | |
General Dynamics GD US | 1.73 | General Dynamics GD US | 1.73 | |
Winpak WPK | 0.21 | |||
Consumer Discretionary | Home Depot HD US | 2.28 | Home Depot HD US | 2.28 |
Sleep Canada ZZZ | 1.70 | Sleep Canada ZZZ | 1.70 | |
Stanley Black and Decker SWK US | 1.68 | Stanley Black and Decker SWK US | 1.68 | |
Dollarama DOL | 0.37 | |||
Linamar LNR | 0.83 | |||
Telecom | BCE BCE | 4.62 | BCE BCE | 4.62 |
Rogers B RCI.B | 3.07 | Rogers B RCI.B | 3.07 | |
Consumer Staples | Alimentation Couche Tard ATD.b | 0.57 | Alimentation Couche Tard ATD.b | 0.57 |
Loblaws L | 1.36 | Loblaws L | 1.36 | |
Pepsico PEP US | 2.66 | Pepsico PEP US | 2.66 | |
Kraft Heinz KHC US | 2.66 | Kraft Heinz KHC US | 2.66 | |
Technology | Apple AAPL US | 1.59 | Apple AAPL US | 1.59 |
Microsoft MSFT US | 2.28 | Microsoft MSFT US | 2.28 | |
Cisco CSCO US | 3.40 | Shopify SH | 0.00 | |
Facebook FB US | 0.00 | |||
Alphabet GOOGL US | 0.00 | |||
Utilities | Fortis FTS | 3.60 | Fortis FTS | 3.60 |
Healthcare | AmerisourceBergen ABC US | 1.78 | AmerisourceBergen ABC US | 1.78 |
Johnson & Johnson JNJ US | 2.59 | Johnson & Johnson JNJ US | 2.59 | |
Walgreen Boots WBA US | 1.73 | Walgreen Boots WBA US | 1.73 | |
Merck MRK | 3.02 | Merck MRK | 3.02 | |
CVS CVS US | 2.43 | CVS CVS US | 2.43 | |
Aphria APH | 0.00 | |||
IBB Biotech ETF IBB US | 0.21 | |||
Real Estate | Cdn Apt. REIT CAR.un | 3.78 | Cdn. Apt. REIT CAR.un | 3.78 |
Chartwell REIT CSH.un | 3.71 | Chartwell REIT CSH.un | 3.71 | |
Pure Industrial AAR.un | 4.78 | Pure Industrial AAR.un | 4.78 | |
European Equity | BMO European ETF ZEQ | 1.88 | BMO European ETF ZEQ | 1.88 |
Emerging Markets | Horizons Active Emerg. Mkts HAJ | 1.84 | Horizons Active Emerg. Mkts HAJ | 1.84 |
Investment Commentary May 2017
As a result of a favourable French election result combined with strong corporate earnings growth in the US and Europe and the possibility of at least some of Trump’s pro growth policies getting passed, I am increasing my equity weight by 5% for both portfolios.
My sector equity recommendations are as follows:
- Continue to overweight Financials, Technology, Consumer Discretionary, Industrials
- Continue to market weight Healthcare
- Continue to underweight Consumer Staples, Energy, Utilities, Real Estate, Materials and Telcos.
In regards to Energy, I am still marginally underweight, but do expect crude prices to rebound somewhat this summer. OPEC is meeting later this month and is expected to continue its production agreement for an extended period of time. Crude is trading at the lower end of its trading range and at current prices a lot of the current US production is uneconomic. This has not yet stopped these US shale producers from cutting production, but at some point this has to happen. I am adding Suncor, a high quality Canadian integrated energy producer with a strong balance sheet and good growth prospects to both portfolios.
I remain overweight Financials, but have reduced my exposure from last month. The issues that Home Capital and the other Canadian alternative lenders are currently experiencing may ultimately affect the Canadian banks as well if they are forced by the government to purchase these lenders’ unsecured mortgage portfolios. I am removing Firm Capital from my Income portfolio. I am adding iUnits US Regional Bank ETF, symbol IAT, to both portfolios. The proposed bank deregulation combined with higher interest rates will help US regional banks as well as the larger multinational ones.
In addition I am replacing Equitable Bank’s High Interest Savings Accounts with Alterna Bank’s High Interest Savings Accounts. The latter company is much more diversified in wealth management than Equitable and has bricks and mortar branches.
In the Materials sector that has recently experienced sharply declining commodity prices, I am replacing Hudbay with Lundin. The latter company has a strong balance sheet with lots of cash and is generating positive operating cash flows at current base metal prices.
In the Industrials sector, I am removing ZCL Composites from my portfolios. The share price has moved up sharply over the last year, but its recent disappointing quarter saw its share price retreat sharply.
In the Healthcare sector, I am removing Universal Health Services that has been accused of overcharging. Also should the proposed new healthcare bill pass the Senate, this will put pressure on all the hospital management companies.
McMurtry Investment Report – Sector Weights (May 2017)
Equity Sector Weights (%) | ||||
Sector | My Weight | TSX Comp | S&P 500 | 50/50 |
Financials | 27.50 | 33.80 | 14.10 | 23.95 |
Energy | 13.25 | 21.40 | 6.30 | 13.85 |
Materials | 5.00 | 12.00 | 2.90 | 7.45 |
Industrials | 12.70 | 9.10 | 10.20 | 9.65 |
Consumer Disc. | 10.00 | 5.30 | 12.50 | 8.90 |
Telecom | 1.50 | 5.00 | 2.30 | 3.65 |
Consumer Staples | 4.50 | 3.90 | 9.30 | 6.60 |
Technology | 15.00 | 2.90 | 22.50 | 12.70 |
Utilities | 1.75 | 3.00 | 3.20 | 3.10 |
Real Estate | 1.50 | 3.00 | 2.90 | 2.95 |
Healthcare | 7.30 | 0.60 | 14.00 | 7.30 |
Totals | 100.00 | 100.00 | 100.20 | 100.10 |
McMurtry Investment Report Asset Mix (May 2017)
Asset Mix – Income and Growth Portfolios | ||
% | Income | Growth |
Cash | 37.50 | 27.50 |
Bonds | 10.00 | 5.00 |
Preferreds | 5.00 | 5.00 |
Equities | 47.50 | 62.50 |
CDN | 21.75 | 29.25 |
US | 21.75 | 29.25 |
Europe | 2.00 | 2.00 |
Emerging Markets | 2.00 | 2.00 |
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