Lists & Rankings

I500: Cambridge Advisors' Brandon Snow's top picks

Looking for value.

Top picks from the pros

Brandon Snow

Portfolio manager, Cambridge Advisors

When Brandon Snow goes looking for companies to buy, he wants to see three things: a defensive business model, a history of capital allocation and a management team whose interests are aligned with those of shareholders. “These are the companies that consistently create value,” he says. While Snow focuses on growth, he doesn’t ignore value. He’ll buy in a cyclical downturn, when good companies are depressed, or he’ll scoop up something that looks temporarily undervalued. Snow also looks across the market-cap spectrum for buys and isn’t afraid to go into cash if nothing looks good. The Lipper Fund Award winner’s CI Cambridge Canadian Equity Corporate Class fund has five-star Morningstar rating and a 10.8% three-year annualized return. His recently launched CI Cambridge Canadian Growth Companies Fund has a 41% one-year return.

Snow’s Picks

1| George Weston (TSX: WN)

Market cap: $9.5 bil | P/E: 17.2

If you’re not familiar with this Toronto-based holding company, you no doubt know the companies it holds: Loblaw and Weston Foods. While Snow also owns stock in the former, he’s recommending its parent because of the recent news that it’s putting Loblaw’s property into a new real estate investment trust. He likes this move because it takes capital expenditures out of the grocery chain’s hands and puts it into what he thinks will be “one of the most interesting” REITs in the country. It also allows Loblaw to focus on its core business, selling food. Snow points out that Weston has a whopping $3 billion in cash, and he expects it to expand its “well run” bakery business. It pays a 2% yield too.

2| Dollarama (TSX: DOL)

Market cap: $5 bil | P/E: 23.2

GNMThis Montreal-based store chain is Snow’s ideal business. It has a strong management team, it’s become a stable earner, and “it’s one of the few growth-y retailers in Canada,” he says. While it has been run up in price this year—its stock rose 22% between January and May—he thinks it can still move higher. The company plans to open 80 new stores this year, adding to the 81 locations it opened in 2012. It’s also offering more expensive price points on some goods. That’s helping the company grow earnings by 18% per year. Snow thinks that Canadian consumer spending will slow, and that’s good news. “People will allocate more of their spend to the dollar store,” he says.

3| Enghouse Systems (TSX: ESL)

Market cap: $530 mil | P/E: 25

Canada’s tech industry may account for just 1.6% of the overall market, but there are still great buys to be had. Snow’s partial to this smallish software firm based in Markham, Ont. It sells programs to help companies with customer service, and it assists transit companies with route scheduling, dispatching and more. Its main attraction is its management team. CEO Stephen Sadler used to run Geac Computer Corp. (he sold it for $1 billion), and he’s on Open Text’s board. “He has a great history in the software space, and he’s a deal guy,” says Snow. Slow underlying growth needs to improve, says Snow, but acquisitions are helping ENG’s earnings expand by about 20% a year.

Snow’s fund: CI Cambridge Canadian Equity Corporate Class

$2.1 Billion Assets under management

5% 5-year annualized return

TOP 5 HOLDINGS

Alimentation Couche-Tard: 5.3%

Tourmaline Oil: 4.7%

CGI Group: 3.8%

Shoppers Drug Mart: 3.6%

Brookfield Asset Management: 3.4%

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