Stephen Takacsy's Top Picks: December 13, 2021

Top picks from Stephen Takacsy, president, CEO, and chief investment officer at Lester Asset Management

MARKET OUTLOOK:

Volatility has increased in equity markets due to fears of the new Omicron variant and central banks increasing rates earlier than anticipated to fight persistent inflation fueled by supply chain disruptions and labor shortages. 

Markets have been driven by easy money from low interest rates and momentum investing, with little regard for valuation, led by a narrow group of large cap stocks. This has created bubbles in stocks like Tesla and other EV plays, as well as in new asset classes like crypto currencies and non-fungible tokens. 

The TSX’s return has been almost entirely driven by energy, financials, and Shopify, and more recently the gold sector, driven by massive inflows into ETFs by foreign investors. Money has been sucked out of other sectors, creating great investment opportunities at compelling valuations such as in renewable energy, certain industrials, healthcare, and non-energy small cap stocks. We continue to be focused on valuation when deploying cash and are starting to see some good opportunities in the overvalued tech sector.

TOP PICKS:

D2L (DTOL TSX) D2L is a world leader in cloud-based e-learning platforms for schools, universities, and corporations with 1000 clients in 40 countries. The pandemic was a massive wake-up call for educational institutions and corporations to upgrade their legacy on-premises systems.