Mark Thomson, managing director, equities at Toronto-based Beutel Goodman & Co. Ltd., says that there are significant opportunities in the Canadian equity market to invest in companies that are strong free cash-flow generators, good dividend growers and disciplined capital allocators, and that trade at reasonable valuations. "Prime hunting ground," he says, "is among the major Canadian chartered banks and the leading Canadian telecom-services providers."
Thomson is cautious about Canadian energy and materials producers in general. Many are saddled with high costs and operational hiccups plus, in some cases, there is the challenge of commodity-price headwinds, he says. "There is a need to pick your spots."
Finally, Thomson says he is eschewing utilities and pipeline stocks, as well as real estate investment trusts. "Even though they're solid cash-flow producers, they're simply too expensive."
