Top picks from Lyle Stein, President, Forvest Global Wealth Management
Focus: North American and global stocks
Top picks: Agnico Eagle, AMD, Vermilion Energy
MARKET OUTLOOK:
After the Liberation Day swoon and subsequent recovery to new highs, global markets are seeking a new catalyst to keep the party rolling. Typically, that comes from either lower interest rates or higher earnings.
On the interest rate front, the expectation of two Fed rate cuts in 2025, with more in 2026, is baked in. On the earnings front, expectations of future earnings growth are not expanding.
Newly proposed tariff levels, while perhaps becoming more in focus, are inflationary and are not good for either corporate earnings or consumer sentiment.
Second quarter earnings results will have to be watched closely to get a sense of what is going on. The best thing about the market is that it appears to be broadening out smaller stocks, value stocks now showing more life. It is a stock-pickers market.
On the global macro level, there are two trends we are watching. Tariffs aside, the 10 per cent decline in the U.S. dollar is not good for the world’s largest capital market. Assets continue to be reallocated to Europe and Asia. Rising deficits globally, and especially in the U.S., have created a sense that the 10-year U.S. Treasury bond yield is increasingly losing its lustre as the global risk-free benchmark off which all assets are valued.
Markets are focused on declining inflation taking yields down. But to get inflation down, economic growth must slow down – a real fiscal/monetary policy dilemma.
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TOP PICKS:
Agnico Eagle (AEM TSX)
Agnico Eagle is a great company, a great gold miner and a great portfolio diversifier. In a time of market uncertainty, gold assets (bullion ETFs, streaming/royalty companies, mine operators and gold managers) provide safety from the two great “unknown of unknowns” – inflation and geopolitical uncertainties. Both are high and increasingly risky.
AEM is a well-managed mining company. I have followed it over the decades and seen a management discipline that doesn’t exist elsewhere in the industry. It and Newmont are the two go-to names to get gold equity exposure (each with $US market caps in the US$60 to 65 billion range).
Low-cost producer in “safe” jurisdictions. Largest single equity position in Forvest portfolios, even after trimming a bit recently at $166.
AMD (AMD NASD)
The “other” AI chip company. The stock got hammered in the tech sell-off post Liberation Day, after sliding in the beginning of the year. We doubled-down at US$88.
It has outstanding growth. AMD 2026 analyst earnings of US$5.85 are virtually identical to NVDA; 2027 analyst projected earnings of $7.18 for AMD compare to $6.44 for NVDA.
The Stock was hit on 2024 earnings misses as AI momentum players sold. Any market penetration in AI chip space is huge for AMD; not everyone is going to buy a Cadillac. While valuations in the sector are scary, diversification requires participation in the space nonetheless. A hated stock, but analysts are slowly changing their views.
Vermilion Energy (VET TSX)
Vermilion Energy was the star of the run-up in European natural gas prices in the immediate aftermath of the Russia and Ukraine war. Dutch gas price hit 350 Euro, now trading at 32 Euro. But 32 Euro is the equivalent of US$12 gas. VET continues to earn the best spreads amongst peers. Recent exploration success in Germany has gone unnoticed.
The market has had concerns about company leverage as they took out a lot of debt in the first quarter to purchase Westbrick, a Deep Basin gas play.
At closing, debt was 1.8 times cash flow. YE 2025 expectation is 1.3 times. That is still high, but manageable with 1 times target longer term. At 65 per cent gas, it is one of top four gas-levered names in Canada.
The company has historically had very good capital discipline: paying down debt, paying dividend, buying shares as appropriate. Part of our Natural Gas Transition Theme. We added stock in mid-$10 range.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| AEM TSX | Y | Y | Y |
| AMD NASD | Y | Y | Y |
| VET TSX | Y | Y | Y |
PAST PICKS: FEB 7, 2025
Cameco (CCO TSX)
Then: $71.30
Now: $107.30
Return: 50%
Total Return: 50%
AltaGas (ALA TSX)
Then: $34.85
Now: $40.79
Return: 17%
Total Return: 19%
Generac (GNRC NYSE)
Then: US$142.11
Now: US$150.53
Return: 6%
Total Return: 6%
Total Return Average: 25%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| CCO TSX | Y | Y | Y |
| ALA TSX | Y | Y | Y |
| GNRC NYSE | Y | Y | Y |
