Stan Wong's Top Picks: October 21, 2021
BNN Bloomberg
Top picks from Stan Wong, portfolio manager, Scotia Wealth Management
MARKET OUTLOOK: After slumping in September, North American equity markets have rebounded sharply in October. Declining COVID-19 cases, robust economic data and solid corporate earnings have helped push market sentiment and stocks higher. Positive seasonality trends have also helped equities.
Historically, the fourth quarter on average has produced the strongest quarterly returns for stocks with the highest positivity rate. Of course, worries about supply chain constraints and inflation pressures could cause renewed bouts of market volatility. Input and end prices have climbed around the world, with commodity prices surging and U.S. inflation numbers hitting 13-year highs. In addition, concerns over the timing and magnitude of interest rate hikes and the tapering of asset purchases by the U.S. Federal Reserve Bank could keep equities in check.
From an intermediate-term perspective, the macroeconomic landscape continues to look favourable – enormous fiscal stimulus, low interest rates and high household savings rates provide a positive backdrop for the global economy.
In Stan Wong Managed Portfolios, we continue to seek strong secular growth companies with high-quality attributes trading at reasonable valuations. We prefer cyclical over defensive equities and remain focused on an active stock, industry and sector selection strategy.
From a geographic perspective, we like U.S. equity markets for its breadth and depth of high-quality names. We also like Europe given its relative valuation discount, broadening economic restart and recent pickup in investor inflows. In Canada, financial and energy stocks continue to look attractive. Aside from precious metals, we expect most commodity prices to remain firm as the global economy continues to expand. In our fixed income allocation, we are underweight government bonds in favour of inflation-protected bonds and short-duration corporate bonds.TOP PICKS:
Facebook (FB NASD) Last bought in October 2021 at $320.00 Facebook is the world’s largest online social network, with roughly 2.9 billion monthly active users and over US$119 billion in expected revenues for 2021. Advertising revenue represents more than 90 per cent of the firm’s total revenue, with 45 per cent coming from the U.S. and Canada, 24 per cent coming from Europe and 23 per cent coming Asia Pacific.
