Ross Healy's Top Picks: February 17, 2022

Top picks from Ross Healy, chairman, Strategic Analysis Corporation; portfolio manager, MacNicol & Associates Asset Management

MARKET OUTLOOK:

Since the last time that I was on BNN Bloomberg, there have been some powerful changes in parts of the market. In particular, the NASDAQ 100 reached the same valuation peak in the period of October through early January as it did in early 2000, and has now set back in what I expect to be the first leg down in that index. 

Some stocks, like Peloton, for instance – the ones without any or much earnings support (and all too often, not much sales support either) – have been massacred by as much as 80 per cent. Unfortunately, I have to observe that most are still not cheap by any measure and many have miles to go before they are finished. 

Others like Shopify and some of the FANG stocks are also on their way lower but, having some modestly decent fundamentals, have held up better thus far. If all this reminds you of the year 2000 at the height of the dot.com boom, it should. 

But – as in 2000 – the value stocks held their ground, as have the golds, and the economy certainly did not implode then. To date, I have no overall sell signal for the general market, and I am in no panic to become defensive – unless, of course, anyone still holds some of those NASDAQ stocks, in which case, I would cheerfully switch to areas of better (any!) value. 

The end of the COVID pandemic should open up the North American economies to a greater degree and add some fillip to the outlook and encourage the overall market to stay the course for now. Finally, I should close by observing that the TSX is far, far better value than the U.S. market, both the NASDAQ and the S&P 500, and I would focus the bulk of my portfolio on Canada.