Three stock picks from Harbourfront’s Wes Ashton

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With the benefit of hindsight, like most investors, portfolio manager Wes Ashton knows late March would have been the best time to buy some of his favourite stocks. However, he still believes there are good investing opportunities in both value and growth companies that have experienced market volatility in recent months.

“I’m more confident in deploying cash today, instead of trying to catch a falling knife” a few months ago, says Mr. Ashton, co-founder and director of growth strategy at Vancouver-based Harbourfront Wealth Management and principal of its largest client practice, overseeing $365-million in assets.

His average portfolio return was 1.5 per cent over the past year as of Oct. 30 compared with a drop of 5.5 per cent for the S&P/TSX Composite Index over the same period. (Mr. Ashton’s performance includes private investments as well as equities and reinvested dividends, and varies by client, depending on their asset allocation and risk tolerance.)

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As for buying stocks, Mr. Ashton says now could be a good time for some investors snap up some technology stocks that are down by double digits since late summer. Beaten-down blue-chip stocks in sectors such as banking and telecom are also attractive today for long-term investors, he says.

It might also soon be time for investors to start dipping into travel sector stocks, once there’s promising news about a COVID-19 vaccine, which could spur pent-up travellers to start booking future trips.

“Travel stocks … are poised to recapture losses as a result of the pandemic,” he says, but cautions investors not to rush in. “You might miss out on the first little bit, but there is so much on the upside you might be able to capture.”

For his clients, Mr. Ashton is invested in a range of large-cap stocks in sectors such as banking, telecom, technology and railways (among others) as well as alternative investments in sectors such as private equity and debt and privately held income-producing real estate.

Earlier this year he also started adding gold and silver to his portfolios, rotating between gold bullion ETFs and actively traded pools of resource companies, to capitalize on rising prices.

“We haven’t owned resources in ages,” Mr. Ashton says. “We want to be exposed a bit in that area.”

Mr. Ashton has his eye on stocks in a few different sectors and shares three of his picks for investors to consider.

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AerCap Holdings NV (AER-N)

  • Market capitalization: US$3.6-billion
  • 52-week range: US$10.42 to US$64.86
  • Nov. 6 close: US$27.04
  • One-year return: minus 54.8 per cent

AerCap is the world’s largest aircraft leasing company that has been hit hard by the pandemic as part of the transportation sector. Mr. Ashton says he believes the stock is poised to do well once travel begins to pick up again, particularly as a COVID-19 vaccine gets closer to reality.

He says the Dublin-based firm has a strong enough balance sheet to make it through the pandemic and is more diversified than buying any single airline. “You aren’t betting on one company, but rather you’re betting a little bit more on the industry,” he says

He says investors should consider looking for another pullback in the stock before getting in. The stock is up about 4 per cent in the past month. Mr. Ashton doesn’t own AerCap, but is considering purchasing the stock for some client portfolios once the pandemic starts to abate.

Apple Inc. (AAPL-Q)

  • Market cap: US$1.9-trillion
  • 52-week range: US$53.15 to US$137.98
  • Nov. 6 close: US$118.69
  • One-year return: 84.6 per cent

Apple stock has been riding the tech wave during the pandemic and has cooled off, alongside most of its peers, in recent weeks. Mr. Ashton notes the stock is down about 14 per cent since its 52-week high in early September and suggests it could be a good time for investors to look at picking up shares ahead of an anticipated strong holiday sales season.

“Buying on the dips to get into stocks like these isn’t bad, especially if you don’t own it already,” he says.

Some of his clients have Apple stock in their portfolios or through ETFs and he’s considering adding the stock to some other portfolios if the valuation becomes more attractive.

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Domino’s Pizza Inc. (DPZ-N)

  • Market cap: US$15.7-billion
  • 52-week range: US$270.08 to US$435.58
  • Nov. 6 close: US$399.85
  • One-year return: 43.9 per cent

Mr. Ashton says he believes this pizza restaurant chain is a good stock to own, especially as more people turn to takeout and delivery during the pandemic era.

He started buying the stock earlier this year and on the recent dip after its third-quarter earnings miss. While the company reported revenue of US$967.7-million, above analyst expectations of US$953-million, earnings per share of US$2.49 came in below consensus expectations of US$2.79, based on a survey of analysts by Refinitiv. The company was hit with higher costs because of the pandemic.

Mr. Ashton says he believes the pizza chain is well positioned ahead of the holiday season and will continue to deliver strong sales, and likes that the stock doesn’t move up and down with the broader market.

“It’s not as correlated with the markets,” he says, which helps to diversify market risk.

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