President Trump’s inability to repeal and replace Obamacare at the end of March, led investors to question whether his other pro-growth initiatives could also fail. Many of the stocks that had previously risen as part of the “Trump Rally” (financials, industrials and energy) retreated once Trump’s healthcare plans didn’t materialize. The growing threats with North Korea, a quarter point interest rate hike despite an anemic 0.7% first quarter GDP growth rate as well as uncertainty surrounding the French election, all created a number of headwinds in April. Although any of these items might be viewed negatively by the markets, the TSX was mildly positive in April and the S&P 500 was up just under 1%.
Despite the worry and the negative headlines that never seem to end, markets continue to move forward. Offsetting this negative news are positive earnings reports from most of the companies that have recently reported – the key driver to equity markets and portfolio returns.
April was a solid month for the portfolio thanks in part to some strong earnings numbers from the likes of Dollarama (a Canadian discount retailer), Packaging Corporation of America, and Canadian Container Manufacturer, CCL Industries…up 19.81%, 8.78%, and 8.4% respectively.
Unfortunately, and as is usually the case, not all holdings were positive over the month. Our energy, resource, metals and mining positions declined partly due to concerns over the Trump rally, reduced earning results, and declining energy and commodity prices. Although these positions have declined over the month, we have not sold them as the fundamentals are still strong. We are looking to add to our energy position with the decline in oil prices as we expect they will rebound (perhaps significantly) sometime this year.
One position that we did sell at the end of the month was Transforce International (TFII) – a Canadian transportation company as recent earnings disappointed and it dropped below it’s respective 200 day moving average.
The proceeds of the sale were used to purchase additional shares in Manulife Financial. We like Manulife because of its recent positive price momentum (blue line) through the 50-day moving average (orange line), the low forward PE ratio (10.95 – Green) which is below it’s historical average, as well as positive Earnings Per Share growth estimates.
Source: YCharts – April 28, 2017
Have a great weekend,
Daniel Popescu CFP, CIM, FMA, FCSI
President & CEO
MNP Tower, 3100-1021 West Hastings St.
Vancouver, BC V6E 0C3
T: 604-558-6830/1(877) 588-6822
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