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Latest Top Picks

Stock Opinions by Andrew Guy, CFA

TOP PICK
This and Toronto Dominion (TD-T) (See Past Top Picks) are the 2 best managed Canadian banks. At this time, this one is the better pick because of the diversification of its assets and the strong management.
banks
TOP PICK
Great history on dividends. Double digits, about 50% annual return on dividend growth. Allows you to participate in the recovery of the financial sector through the assets they own. Very well run.
finance / leasing
TOP PICK
Very good long-term business. Double-digit return on capital. Consistent 10% a year dividend growth. Attractive level. Owns Business Week, a number of TV channels and publishes schoolbooks. Also owns S&P 500.
publishing / printing
PAST TOP PICK
(A Top Pick Oct 14/08. Up 18.27%.) This and Royal Bank (RY-T) are the 2 most consistent performers in Canadian banks. (See Top Picks.) Increased its dividend in the later part of last year. US assets have done very well.
banks
PAST TOP PICK
(A Top Pick Oct 14/08. Up 23.38%.) World's largest generic drug company. Also have some branded drugs that are doing very well.
biotechnology / pharmaceutical
PAST TOP PICK
(A Top Pick Oct 14/08. Up 2.82%.) Largest liquor company globally. Very disciplined approach to return on capital. Paying down debt and increasing dividends.
food processing
BUY
Generates strong return on capital, shareholder friendly and focused on their particular niche. This makes it an attractive business from a bottom up point of view but methanol production is a cyclical product. You want to pick your timing very carefully. If you have a longer-term outlook such as 3 years, it could be attractive. Dividend of 3.46%.
chemicals
DON'T BUY
Regional bank based largely in Quebec. Has done a great job over the past few years of improving its returns on capital. Being a smaller regional bank, they are more susceptible to very focused economic situations. For a Quebec play he would prefer National Bank (NA-T).
banks
COMMENT
Fertilizers. Good returns on capital and have strong balance sheets but are not dividend friendly. A seasonal play. Possibly November/December would be a better time to play.
integrated mines
COMMENT
Fertilizers. Well diversified. Shareholder friendly and increases their dividend. Very disciplined approach. Very strong return on capital. 0.23% dividend.
chemicals
BUY
Regulated utility. In the last few years have done a great job of diversifying but into regulated businesses that they know very well. Stable, strong free cash flow. Good management.
electrical utilities
DON'T BUY
Very speculative. Have a huge insurance company that needs to break itself up. Has only kept going because of lifelines from the US government. The government has the right to convert its holdings into shares, which could reduce individual shareholders holdings.
insurance
BUY
Very strong balance sheet. Strong returns on capital over time. Steady increase of dividends. In a competitive sector but with the merger with Reuters last year it has ended up in a duopoly in information to the desktop.
publishing / printing
DON'T BUY
Largest drug company globally. Very strong number of products but along with most of the big pharmaceutical companies there are a large number of drugs that come off patent. About 25% of their earnings comes from one drug, Lipitor and when it comes off patent it will have a big effect on their earnings. There are better places to be.
biotechnology / pharmaceutical
DON'T BUY
Have a number of different assets in different fields. Recapitalized Brookfield Renewable Power Fund (BRC.UN-T) (formerly Great Lakes Hydro Fund) and have an opportunity to continue to build as part of their asset book. Very smart management. Trading around their NAV. Too expensive.
management / diversified
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