Eight investment professionals have been invited to choose a North-American listed security – be it a stock, American depositary receipt or exchange-traded fund – to outperform this year. Canadian securities must have a minimum market value of $100-million, while the market capitalization of U.S. names must be more than $1-billion (U.S.). All returns will be calculated in Canadian dollars, including reinvested dividends. The prize? Once again, it’s eternal bragging rights, and a Globe and Mail coffee mug. Here are their picks:
Gail Bebee, author, No Hype – The Straight Goods on Investing Your Money
Granite Real Estate Investment Trust (GRT.UN-TSX): The former global real estate arm of Canadian auto parts giant Magna International Inc. converted to a REIT on Jan. 3. There is a secure revenue stream from factories leased to Magna globally, but it has started to diversify its real estate portfolio, she said.
Robert McWhirter, president and portfolio manager, Selective Asset Management Inc.
ProMetic Life Sciences Inc. (PLI-TSX): The biopharmaceutical company has developed technologies to remove contaminants from blood and recover valuable proteins from plasma. It has negotiated $21-million in investment agreements with China’s Shenzhen Hepalink Pharmaceutical Co. Ltd. ProMetic, which will use part of those funds to develop therapeutics for blood-related disorders, he said.
Alex Ruus, portfolio manager, BluMont Capital Corp.
Neptune Technologies & Bioressources Inc. (NTB-TSX): The biotechnology junior develops nutritional supplements and other pharmaceutical products, including its Neptune Krill Oil. Its stock should appreciate as results from the phase two drug trials on its cholesterol drug CaPre are reported this year, and a new Quebec plant is built to replace one destroyed by fire last fall.
David Sherlock, portfolio manager, McLean & Partners Wealth Management Ltd.
Cliffs Natural Resources Inc. (CLF-NYSE): Shares of the largest U.S. iron ore producer will benefit from an improving Chinese economy this year, he said. Rising Chinese demand will help lift iron ore prices, while a move to put off costly capital expenditures and sell properties should keep the company from having to cut its dividend, he added. His target is about $66 a share for this stock, which has a 6.6-per-cent yield.
Benj Gallander, president, Contra the Heard newsletter
Flextronics International Ltd . (FLEX-Nasdaq): The U.S.-based electronics manufacturer has been in “major turnaround mode” after struggling during the recession and from the loss of major customer Research In Motion Ltd., he said. But it has diversified its customer base, bought back shares and is nicely profitable. “A return above $20 a share eventually is not out of the question.”
Brian Pinchuk, analyst, Lorne Steinberg Wealth Management Inc.
Hewlett-Packard Co. (HPQ-NYSE): Shares of the U.S. computer giant trades are close to an 18-year low after being plagued by management mishaps, he said. It should to return to growth by 2014 as Windows 8 gains traction on touch-based devices, a market it is starting to penetrate, he added. Its information technology services business is worth the current share price, while its break-up value exceeds $35 a share, he said.
Stephen Rogers, portfolio manager, Horizons Investment Management Inc.
Alexion Pharmaceuticals (ALXN-Nasdaq): The U.S.-based biopharmaceutical company is “one of the most impressive growth stories” in its industry because of the Soliris drug used to treat blood and kidney disorders, he said. Its share pullback last month creates a rare buying opportunity for a company with a strong record of reporting results that exceed consensus estimates.
Nelson Cheung, portfolio manager, Formula Growth Ltd.
Baidu Inc. (BIDU-Nasdaq): China’s largest search engine operator should benefit from rising advertising spending expected by the second quarter as country’s economy improves, he said. The stock is suffering from the “worst sentiment and lowest valuation in years” despite difficulty by rivals to enter its business, and a compounded annual growth rate of 30 per cent, he added. The stock is cheap at 13 times projected 2014 earnings, he added.