Top picks from President & CIO of wealth management company

Barry Schwartz, President & CIO of Baskin Wealth Management, shares his outlook on North American Large Caps.

Barry Schwartz, President & CIO, Baskin Wealth Management

Focus: North American large caps

Top picks: Taiwan Semiconductor Manufacturing Company, TFI International, Costco

MARKET OUTLOOK:

How in the world are S&P 500 estimates climbing? Simple. It’s because of the incredible growth from Mega caps names like Nvidia, Broadcom, Amazon, Microsoft, Meta, Oracle, Wal-Mart, JP Morgan, Visa, Mastercard, Netflix. These are companies that have limited tariff impacts, are riding the explosive demand for artificial intelligence (AI) and storage or still seeing a strong U.S. consumer.

The market is focusing on headlines but missing the great news that is happening. This is why S&P and Nasdaq are at all-time highs:

Earnings growth is accelerating. S&P 500 earnings estimate for 2025 are US$265 a share vs $242 in 2024, for growth of 11.5 per cent in vs. 9.7 per cent growth in 2024. And estimates are for 13.8% per cent growth in 2026. Investors should pay higher multiples for faster growth.Interest rates have peaked in the U.S., and many expect rate cuts in both 2025 and 2026.Inflation has stabilized and there seems to be little threat of significant inflation.What is more impressive is that tariffs seem to be a non-event to earnings on an overall basis as it is being offset by enormous spending on AI which few expected.

As a Canadian wealth manager, we are still finding the best opportunities in U.S. companies. Many of our investments are in U.S. based businesses. Say what you want about the U.S., but no one can deny that it has bred the best businesses in the world, and those businesses deserve to trade at higher valuations. In the past the S&P was dominated by cyclical and commodity businesses but now the largest market cap companies are technology global platforms that can generate recurring revenues and ungodly free cash flows at scale.

TOP PICKS:

Barry Schwartz’s Top Picks: Taiwan Semi, TFI International & Costco Barry Schwartz, President & CIO of Baskin Wealth Management, shares his top stock picks to watch in the market.

Taiwan Semiconductor Manufacturing Company (TSM NYSE)

The most important company in the world in our opinion. Taiwan Semiconductor Manufacturing Company is the only company with the technology and capacity to manufacture leading-edge chips that power AI, smartphones, 5G, self-driving cars and more. These trends are expected to grow TSM’s sales over 20 per cent through 2030. The management has done an outstanding job of managing manufacturing capacity to meet the demand of customers while achieving high returns on invested capital.

TFI International (TFII TSX)

Stock has performed very poorly this year as the worries about tariffs have slowed the movement of goods. Now that there is more clarity on tariff rates, we think the trucking business has stabilized and TFI will resume its growth later this year. In the meantime, the company has been aggressive reducing its expenses and has bought back a meaningful amount of its shares. We think TFI can deliver at least US$8 a share in a normal operating environment.

Costco (COST NASD)

The best retailer in the world, it has decades of growth ahead of itself. We see it opening 25 to 30 stores a year for at least the next twenty years. The Costco concept is universal, with low prices, quality products and outstanding customer service. As Costco adds new members it can reinvest the proceeds into new products and service offerings. The valuation is expensive but deserves a premium given the durability of its brand.

DISCLOSUREPERSONALFAMILYPORTFOLIO/FUNDTSM NYSEYNYTFII TSXYNYCOST NASDYNY

PAST PICKS: JULY 18, 2024

Barry Schwartz’s Past Picks: CCL Industries, Domino’s Pizza & Amazon.com Barry Schwartz, President & CIO of Baskin Wealth Management, discusses his past stock picks and how they’re doing in the market today.

CCL Industries (CCL/B TSX)

Then: $72.93

Now: $81.42

Return: 12%

Total Return: 13%

Domino’s Pizza (DPZ NYSE)

Then: US$409.04

Now: US$462.32

Return: 13%

Total Return: 15%

Amazon.com (AMZN NASD)

Then: US$183.75

Now: US$224.57

Return: 22%

Total Return: 22%

Total Return Average: 17%

DISCLOSUREPERSONALFAMILYPORTFOLIO/FUNDCCL.B TSXYNYDPZ NYSEYNYAMZN NASDYYY