Alex Ruus' Top Picks: October 6, 2021
BNN Bloomberg
Top picks from Alex Ruus, portfolio manager, Arrow Capital Management
MARKET OUTLOOK: It has been a good year for the stock market and a great year for the NR Conservative Growth LP. While we are happy with the 40 per cent return year-to-date for the fund, we expect the markets to be up single digits over the coming year and the fund to do even better.
The economy has recovered solidly from 2020’s COVID recession and we expect further recovery over the coming year. While the initial year of the market recovery rewarded almost all stocks in the market, we expect the coming year to be more discerning, requiring strong stock-picking skills to attain strong results.
The NR Conservative Growth LP is well positioned to profit in this environment with its focus on buying great companies trading at discounts to their intrinsic values. TOP PICKS:
Freehold Royalties (FRU TSX) A fantastic North American owner of oil and gas royalties with rising earnings and dividends. Freehold has rock bottom production costs, great assets, and is the most compelling opportunity to invest in royalties in the markets. The company trades at a compelling double digit free cash flow yield and 6 per cent dividend.
Polaris Infrastructure (PIF TSX) An owner of undervalued green power generation assets in the Americas. Polaris owns a variety of geothermal and run-of-river power generation assets in the Americas which generate steady earnings for power sales as well as sale of carbon credits. The company has a record of steadily rising earnings and dividends, all the while it trades at a huge discount to other green power generators at just 7 times EBITDA along with an attractive 4.4 per cent dividend yield.
Anthem (ANTM NYSE) The second largest provider of U.S. healthcare insurance to individuals, corporations, and the government. Anthem is a good news story of getting the best value for its customers’ healthcare dollar by negotiating the tricky U.S. healthcare landscape. The company has a long history of rising earnings, dividends, and share buybacks. The stock trades at an attractive 13 times earnings and 1.2 per cent dividend.
