Jamie Murray’s Top Picks: October 25, 2021

Jamie Murray, Portfolio Manager and Head of Research, Murray Wealth Group
FOCUS: North American equities


Markets survived their first correction of the year, with the S&P 500 at a time down 6% from its September 2, 2021 high. This was the first test for investors since fall 2020 , when the market sold- 9 percent before the US federal election.

As we move forward, interest rates will likely rise from unusually low levels (the 2012-2020 range was 1.5-3.3% for the 10-year U.S. bond), which will benefit investors. financial but will negatively affect long-term growth stocks.

Commodities are better positioned, with a moderate supply response after a decade of underinvestment. Automakers and component manufacturers are expected to benefit from pent-up demand as supply issues ease in 2022. The aerospace industry is on the cusp of a new aviation cycle, with growth coming from increasingly from developing countries. Stay invested in market leaders with pricing power.


Jamie Murray’s Top Picks

Jamie Murray, Portfolio Manager and Head of Research at Murray Wealth Group, discusses his top picks: Zalando SE ADR, Dollar Tree and Enbridge.

Zalando is one of the leading European e-commerce clothing companies in Europe with a gross market value of products sold of 14 billion euros in 2021. It has an active customer base of 45 million Europeans – we believe the most large fashion market in Europe. Initially operating as a fashion clothing wholesaler, as the e-commerce market evolved, brands wanted more control over their pricing, marketing, and data by moving to a direct-to-consumer model. Zalando’s flexible asset base has enabled the company to pursue a new strategy, its Partner Program, which provides a valuable suite of tools and services to fashion brands. Zalando can now offer order fulfillment, consignment, marketing and connected retail. As these high return on capital companies evolve, Zalando is expected to see its EBIT triple by 2027, while revenues increase by around 80%.

Dollar Tree (DLTR NASD)
Dollar Tree is committed to making its stores in the United States profitable, which should create opportunities for higher productivity stores and higher synergies with its Family Dollar brand. The company is grappling with higher freight costs given the tight shipping markets from China, but we expect this situation to resolve in the medium term and become a tailwind at some point. Successfully executing a multi-price strategy could see EPS grow at a mid-teens rate for more than 5 years, an attractive growth rate for a company that trades at 16x EPS.

Enbridge (ENB TSX)
With the recovery of global crude markets, we believe Enbridge offers a low risk investment with a potential annual return of 10% with a dividend of 6% and cash flow growth of 6%. The company simplified its corporate structure and strengthened its competitive position with the commissioning of Line 3 and the acquisition of the largest crude export facility on the US Gulf Coast. Returns could be improved through additional accretive acquisitions that could generate synergies across its vast portfolio or through ESG opportunities associated with hydrogen production and carbon capture.

PAST CHOICES: September 4, 2020

Jamie Murray’s Past Picks

Jamie Murray, Portfolio Manager and Head of Research at Murray Wealth Group, discusses his past choices: Aon PLC, Tyler Technologies and Gibson Energy.

Aon Plc (AON NYSE)

  • Then: $ 202.74
  • Now: $ 320.83
  • Efficiency: 58%
  • Total efficiency: 59%

Tyler Tech (TYL NYSE)

  • Then: $ 329.81
  • Now: $ 528.43
  • Efficiency: 60%
  • Total efficiency: 60%

Gibson Energy (GEI TSX)

  • Then: $ 23.93
  • Now: $ 24.45
  • Yield: 2%
  • Total yield: 9%

Average total return: 43%

AON NYSE Yes Yes Yes
GEI TSX Yes Yes Yes

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