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Markets. Doesn’t think we are going to see volatility go away this year. There will be a lot of people speculating about when and if the Fed raises rates again, maybe in the latter half of 2016, and potentially earlier, depending on inflation. That will create a lot of sector rotation. Given that we are in the mid to late stages of the business cycle, investors should try to focus on those companies that have good, visible earnings growth. This is not the kind of market where you are going to necessarily see value outperform, so you want earnings visibility and predictability. In addition, you want companies that have relatively strong balance sheets, because what we saw earlier this year was concern about low commodity prices, global growth, and the credit market come under a lot of pressure.

Thinks the telco sector in Canada is fairly valued. Valuations on a relative and historical basis are high, however they provide stable and predictable earnings. He has some concerns with what is happening in Western Canada with Shaw and Telus (T-T) given Shaw’s intention to expand its wireless network. It is going to be a very competitive environment and expects there will be potential pressure on pricing. Prefers BCE (BCE-T) or Rogers (RCI.B-T) whose valuations are a little more compelling with less dynamic pressures.

Owns a little. Has a preference for some of the large US cap banks, the money centres, where he is optimistic about the underlying loan growth, both with respect to consumers and corporations. Consumer and corporate balance sheets in the US are very strong. You can reasonably expect mid single digit loan growth, approximating 3%-5% during the next couple of years. The big issue is because the 10-year interest rates have gone down. Banks typically make money when interest rates go up, because they can lend it out at higher rates. Valuations on US banks are very compelling when you look at them on a historic basis.

Receives a subsidy from TransAlta (TA-T) for some of the coal fired facilities in Alberta. If the power price is lower than a prescribed amount, then TransAlta kicks in the difference. You have to ask if TransAlta is a going concern. If there is early retirement of their coal fired facilities, it could potentially threaten their viability and their ability to make payments to this company. A good investment longer-term, but he does have concerns about the parent. There are other renewable players he prefers such as Algonquin (AQN-T).

Owns a little. Canadian REITs have bounced off the bottom during the last couple of months, in part because of higher oil prices and higher commodity prices. That has benefited the entire sector. This operates in an area where rents are not regulated.

Would accumulate this anywhere around $15. Payout ratio is relatively low. There is a good path to dividend and cash flow growth. A very sustainable business, especially given all the acquisitions they have undertaken in the last couple of years. This is going to be a very steady performer where you are going to be able to bank on 5%-10% total return through to 2017.

Thinks valuations across the board are relatively stretched for these companies. Has some secular concerns when it comes to cable and telecommunication businesses, which have kept him out of it. You are going to see a tremendous amount of cord cutting i.e. consumers opting for skinnier cable packages or no cable package. That could significantly pressure pricing in the future.

An industrial REIT, well diversified across Canada. Has some Western Canada exposure where, if you look at the in-place rents, they are about 5% higher than the market rent, so there is going to be a bit of a negative headwind there. That is somewhat offset by strength in eastern Canada. The 80% payout ratio indicates that as “same property NOI” (net operating income) growth kicks higher in the next couple of years, especially given a lower Cdn$, you could get some dividend growth and capital appreciation potential. Trades at about a 10% discount to NAV.

American mortgage REITs? These are really tough to get a handle on. The dividends aren’t really very sustainable, because the underlying nature of the business is borrowing money on the short end of the curve, and lending it out on the long end. There are a lot of underlying hedges to insulate the portfolio, but it is hard to get your head around. Typically you want to buy these when they are trading at .8X BV. He is not comfortable with the changes he is seeing in the yield curve.

(A Top Pick March 19/15. Down 16.7%.) Sold his holdings in June. Recreational vehicle sales tend to be very highly correlated with employment and household formation, which have both been strong. What really affected them was the US$, as they derive about 25% of their sales from outside of the US, but manufacture everything in the US.

(A Top Pick March 19/15. Up 19.04%.) An apartment REIT based in Eastern Canada. Most properties are in Ontario where rents are regulated, but they tend to focus more on “value add”, where they buy a property that is not really achieving its full potential, put a little bit of money into it, and try to ramp up the occupancy, which has certainly worked out well for them.

(A Top Pick March 19/15. Down 31.43%.) A transportation logistics company. Sold his holdings in June and missed some of the decline. Was negatively affected by the higher trade weighted dollar. Trading at about 10X earnings, so it is still very cheap. Has a decent balance sheet and good returns on equity, so is one that he could potentially revisit at some point.

Trades at a huge discount relative to NAV. One of the cheapest diversified REITs in Canada. Payout ratio is relatively low, so you don’t have to worry about a dividend cut. There is probably $3-$4 of capital appreciation potential, especially if oil prices can sustain themselves at around $40. The big knock is that they have Western Canada exposure, about 30% of their portfolio, and rents in Western Canada, especially suburban office rents in Calgary, are really declining by 15%-25%, so there is going to be a pretty big hit that is going to happen, but to some extent that has been offset by the strength in this company’s US portfolio. He would Buy and bank on the 8.5% dividend yield.

One of the largest telecommunication companies in Germany. Has a significant stake in T-Mobile in the US. The German telecom market has consolidated, and there are only about 4 big players. Still in earlier stages of LCE adoption, meaning that smart phones haven’t fully penetrated the market. They’ll get the benefit of increased smart phone penetration, bundling, and at some point look to monetize their T-Mobile position, which would unlock a lot of shareholder value. Also, has a 4%-5% stable dividend yield.

Likes this company. There is good secular growth that underpins the sector, i.e. that the number of people over age 65 is going to double within the next 25 years, which obviously creates more demand for retirement residences and facilities. This is one of the biggest providers in Canada, and do a fantastic job when it comes to managing expenses. If you own, you could consider taking a little money off the table, but it is a good, long term hold.