Gordon Reid’s Top Picks for July 15

Gordon Reid, President & CEO, Goodreid Investment Counsel

Focus: Equities

Top picks: Apple, CrowdStrike, MasTec

MARKET OUTLOOK:

When U.S. President Donald Trump won his second presidential term in November of last year, we, along with many other investment professionals, predicted greater market volatility and unsettled conditions. Few of us would have predicted the wild swing the markets took in the second quarter of 2025.

Beginning on April 2 with his Rose Garden declaration of extremely high (and many argued, arbitrary) tariffs on virtually all nations, investors have been witness to the Trump playbook of negotiation, which includes chaos, confusion, misinformation, doubling down and chickening out.

Goodreid’s investment strategy was to observe, knowing that our portfolios were carefully populated with well managed companies with durable competitive advantages, that can grow with compound earnings and cash flow over the long term. Ideally, it is our goal to hold these companies for many years and to watch as our investment thesis plays out, regardless of the current economic, market or political conditions.

In investing, you’ve probably heard the term ‘climbing the wall of worry’, which is the phrase used to describe a phenomenon where stock prices continue to rise despite a multitude of ongoing negative economic, political, or social concerns and anxieties among investors. It is the market’s way of telegraphing that it can see past current conditions and focus on future solutions rather than current problems.

The second quarter of 2025 will go down as a great example of this phrase, because as investors we’ve endured political angst, recession fears, sticky inflation, two ongoing wars, the most damaging potential tariff increases in decades – all to end of the second quarter near all-time high stock market levels in Canada and the U.S. It is a great reminder to stay invested and to not get spooked by negative headlines. No one can successfully time the market, and on a yearly basis the market rises 70 per cent of the time. In investing, sometimes the best thing to do is nothing!

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TOP PICKS:

Apple (AAPL NASD)

Apple’s relevance in the AI race is being questioned in some quarters. If one goes to school on Apple’s history, however, a pattern of allowing others to do the early work, make the mistakes and spend big money, followed by Apple’s steps in to take technologies to new heights, is evident. Apple has the ecosystem, controls the application world, owns the consumer and has very deep pockets. Stay tuned.

CrowdStrike (CRWD NASD)

Revenue growth (The Street assumes 24 per cent annually for the next decade), margin expansion (50 per cent increase in the next couple of years), Free cash flow (FCF) expansion (now at 33 per cent of revenue), in an asset light environment, make this company very attractive. As the Cloud and AI grows so does the demand for cyber security products. Recurring revenue is high and increasing with subscription revenue making up 94 per cent of total revenue, while their retention rate is 97 per cent.

MasTec (MTZ NYSE)

MasTec is an infrastructure company involved in pipeline development, communication infrastructure, power delivery and clean energy development. Projected growth rates of revenue, earnings and cash flow are double digit for the next several years and margins have been expanding. The needs for large project engineering, especially within the power grid are expanding and should lead to both volume and profit expansion.

PAST PICKS: JULY 16, 2024

Amazon.com (AMZN NASD)

Then: US$193.02

Now: US$225.89

Return: 17%

Total Return: 17%

NASDAQ INC (NDAQ NASD)

Then: US$62.48

Now: US$89.12

Return: 43%

Total Return: 44%

Morgan Stanley (MS NYSE)

Then: US$104.81

Now: US$142.90

Return: 36%

Total Return: 40%