Kristen Paul’s Top Picks: September 20, 2022

Kristen Paul, CEO and Managing Director of GlobeInvest Capital Management

Focus: Large stocks in North America


Market Outlook:

Inflation, a lagging indicator, is moving in the right direction but remains very hot and well above the US Federal Reserve’s target range. Employment, a coincident indicator, is healthy and provides ammunition for the Federal Reserve to raise interest rates quickly to achieve price stability. High inflation does not appear to be an integral part of future expectations, with the five- and 10-year break-even inflation rates at 2.49 percent and 2.38 percent, respectively.

Tight monetary policy combined with the accelerating pace of quantitative tightening increases the downside risks. The leading indicators of a pending recession offer a mixed view. The US Treasury yield curve has inverted since June, indicating a (potential) recession on the horizon. On the flip side, the high-yield debt spread remains below the historical long-term average and does not reflect growing concern about default risk. In addition, ISM manufacturing and services indicators continue to report expansionary economic activity.

The protection afforded by the excess savings accumulated during the pandemic and a robust labor market has allowed most families to maintain their consumption despite the erosion of their purchasing power. The pace of inflation falling is critical because savings will eventually run out. A more cautious outlook by consumers and businesses means weaker demand and weaker job growth. The latter is already showing up in Canada while the unemployment rate remains flat in the United States.

Volatility will remain high until there are more clear signs that inflation is declining. Investors are encouraged to be patient and use pullbacks to invest in good income and growth stocks.

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top picks:

Kristen Paul’s best picks

Kristen Paul, CEO and Managing Director at GlobeInvest Capital Management, discusses her top picks: Alphabet, BCE Inc, and Dollar Tree, Inc.

Alphabet (GOOGL NASD)

Last purchase price ranged between $102 in September 2022

Alphabet is a global technology company, providing the world’s leading search engine, Google, and dominating both desktop and mobile global search engine queries. The company has benefited from the shift to online advertising, offering various digital advertising tools powered by artificial intelligence. Other revenue sources include Google Cloud, YouTube, and Google Play.

BCE Corporation (BCE TSX)

Last purchase price ranged $62 in September 2022

BCE is Canada’s largest telecommunications company operating across three segments; Wired, wireless and media. Its service offerings benefit from the revival of international travel and the strong immigration flow to Canada. BCE offers an attractive dividend yield of 5.9 percent.

Dollar Tree (DLTR NASD)

Last purchase range $139 in September 2022

The Dollar Tree is an operating company of diversified discount retail stores under two banners, Dollar Tree and Family Dollar. Its growth prospects have been boosted by moving to the Dollar Tree’s multi-point strategy and initiatives to drive traffic and productivity on the Family Dollar banner.

Previous Picks: Sep 14, 2021

Kristen Paul’s past picks

Kristen Paul, CEO and Managing Director of GlobeInvest Capital Management, discusses her past choices: Apple, Envista Holdings Corp, and TD Bank.

Apple (AAPL NASD)

  • Then: $148.12
  • Now: $156.03
  • Yield: 5%
  • Total return: 6%

Invista Holdings (NVST NYSE)

  • Then: $43.52
  • Now: $33.58
  • Yield: -23%
  • Total return: -23%

TD Bank (TD TSX)

  • Then: $81.76
  • Now: $87.55
  • Yield: 7%
  • Total Return: 11%

Average total return: -2%

AAPL NASD s s s
NVST NYSE s s s
TD TSX s s s

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