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TOP PICK
Stockchase Research Editor: Michael O'Reilly As one of Canada's largest insurers, with rapidly growing operations in the US and Asia, we again reiterate MFC as a TOP PICK. Recently reported earnings again beat analyst expectations and support a respectable 14% ROE, which helps support a great dividend yield that employs less than 35% of cash flow. It trades at 8x earnings, compared to peers at 33x. We recommend trailing up the stop (from $21.00) to $24.50, looking to achieve 31.50 -- 15% upside potential. Yield 4.84% (Analysts’ price target is $31.33)
insurance

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TOP PICK
Stockchase Research Editor: Michael O'Reilly As European countries develop new secure supply strategies, we think this company will play a big part in this going forward and that is why we again reiterate BP as TOP PICK. It pays a good dividend, backed by a payout ratio under 60% of cash flow. It trades at 14x earnings compared to peers at 17x and at just 1.1x book value. We like that the company continues to aggressively retire debt and buy back shares. We recommend trailing up the stop (from $26) to $28, looking to achieve $37 -- upside potential over 17%. Yield 4.11% (Analysts’ price target is $37.00)
integrated oils

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TOP PICK
Stockchase Research Editor: Michael O'Reilly With EPS growing 24% annually over the past three years and revenues up 24% this past year, we once again reiterate this private equity based income trust, who focuses on unique buyout and industry consolidation opportunities, as a TOP PICK. It generates about 85% of its cashflow from US operations (the rest in Canada), in a well diversified portfolio of assets. It pays a good dividend, backed by a payout ratio under 45% of cash flow from operating activity. We recommend keeping the stop at $17.00, looking to achieve $24.00 -- upside potential over 18%. Yield 6.6% (Analysts’ price target is $23.61)
Trust, Savings and Loan

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PAST TOP PICK
(A Top Pick Nov 03/20, Up 17.6%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with AMGN is progressing well. We now recommend trailing up the stop (from $218) to $228.
biotechnology / pharmaceutical

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PAST TOP PICK
(A Top Pick Dec 28/21, Up 12.1%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with WMT is progressing well. We now recommend trailing up the stop (from $134) to $145.
department stores
COMMENT
Catalysts to keep an eye on. So many balls in the air right now. Inflation, higher commodity prices, possible wage inflation, possibly inflation expectations are too high, Ukraine. All making it much more difficult to understand where the economy is going and what the Fed's intentions are. You can see this from the volatility in the stock market. One day up, one day down, no consistency. Watch whether the Fed decides to increase by 50 bps, do that for several months, and then slow down. Also watch whether companies continue to beat earnings, but the more important thing is what are they forecasting for the next several quarters. Will they be able to increase pricing, maintain margins, and grow free cashflow? The other geopolitical issues are important because they have an effect on how central banks look at the world, especially in Europe. The IMF brought down global growth projections for the year. Volatility will continue for the next and following quarters at least. Volatility can be your friend, as you can buy companies you like at relatively cheap valuations.
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COMMENT
Sectors to look at. Hard to just stay in cash, as you miss opportunities when the market turns around and rallies. You could be in bank or financial stocks, or healthcare which will be more defensive. Interest rates might impact utilities, but they give you a really nice dividend and you can manage through the volatility. For asset allocation, you want to be in an asset class that offsets equity risk. Traditionally, that's been fixed income. You could be in some defensive names, collect the nice dividend, and wait for a chance to change your portfolio to something with a bit more growth when we get more clarity on interest rates and geopolitical situations.
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