Jeff Parent, Chief Investment Officer, Castlemoore,
Focus: Technical analysis
Top picks: CN Rail, Campbell’s, ESCO Technologies
MARKET OUTLOOK:
There are a lot of geopolitical balls in the air at the moment, and the markets are discounting the associated risks. The read from the charts is that the issues will resolve themselves in a way that won’t negatively affect large economies. It took a lot of buying to reverse the February to April decline to bring us back above the 6,000 level on the S&P500.
Considering the risks that caused the decline (conflicts and U.S. trade) that are still mostly present, we may be seeing unfounded optimism. Technically, a double top is forming with the S&P 500 level of 6,070 acting as a major resistance. Double tops are typically reversal signals. We will form stronger opinions on the future direction if we see a breakout above resistance. In the meantime, we would not be surprised to see a drop back to the 5,500 level.
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TOP PICKS:
CN RAIL (CNR TSX)
CN Rail is a Canadian stalwart in the lower part of a long-term trading range. After declining down to $130 in April, there was a great run up to above $150 and is now settling in the $140 range. The company is spending over $3 billion on infrastructure. That may be the driver for future growth. You should sell if it drops below 130.
Campbell’s (CPB NASD)
Campbell’s may finally be entering the final phase of it’s decline. Volume is picking up indicating a potential bottom. Fundamentally, the dividend is good and increasing, and the company is entering the snack business with acquisitions. Begin selling if the price drops below $29.
ESCO Technologies (ESE NYSE)
ESCO Technologies is attracted by the strong earnings reports. They work in the defence industry. This is an earning momentum play. Stock looks overbought now. It could fall back to the low $170 level. Enter with a small position now.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| CNR TSX | N | N | N |
| CPB NASD | N | N | N |
| ESE NYSE | N | N | N |
PAST PICKS: JUNE 24, 2024
Altagas (ALA TSX)
Then: $30.48
Now: $38.28
Return: 26%
Total Return: 30%
Microsoft (MSFT NASD)
Then: US$447.67
Now: US$482.30
Return: 8%
Total Return: 8%
Mueller Water Products (MWA NYSE)
Then: US$17.61
Now: US$23.48
Return: 33%
Total Return: 35%
Total Return Average: 24%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| ALA TSX | Y | N | Y |
| MSFT NASD | Y | N | Y |
| MWA NYSE | Y | N | Y |
