It has a solid and growing 3.2 per cent dividend yield supported by a strong 18 per cent free cash flow yield. Listen to the Market Call podcast on iHeart, or wherever you get your podcastsĭennis da Silva, managing director and senior portfolio manager at Middlefield Group, discusses his top picks: Arc Resources, Whitecap Resources, and CF Industries.Īrc Resources is a premier Montney gas company that trades in line with peers and well below historic levels.Sign up for the Market Call Top Picks newsletter at bnnbloomberg.ca/subscribe.Despite the correction, most commodities are at prices well above average over the last 10 years. Commodities have been caught up in broad market weakness due to recession fears.
Soaring commodity prices have increased the risk of food shortages and a global energy crisis, particularly in Europe. This effectively removed Russian supplies of a number of critical commodities from global markets, including oil, wheat, base metals and fertilizers. The attack spurred a swift response from the global community in the form of unprecedented economic sanctions in an effort to isolate Russia from the global economy. Russia’s unexpected invasion of Ukraine in late February 2022 further exacerbated inflationary forces. As a result, we believe the downside in broad market indices should be limited from current levels and are seeing an increasingly attractive setup for equities later this year. Much of this is already being priced into markets today, reflected in the S&P 500 forward earnings multiple declining from 21x to below 16x. Given the impacts that inflation and higher interest rates will have on demand, we expect a mild slowdown in economic activity this year. We believe we are in a cyclical bear market which is a function of rising rates and inflation, combined with lower profit expectations. Dennis da Silva, managing director and senior portfolio manager, Middlefield Capital Corporation