Top Picks from Lyle Stein, President, Forvest Global Wealth Management
Focus: North American & Global Stocks
Top picks: ExxonMobil, iShares MSCI South Korea ETF, Stryker
MARKET OUTLOOK:
Markets are off to a shaky start to Q3. The reclosing of Strait of Hormuz (and now, the Red Sea) has not only dislocated the global economy (oil prices), but even worse, rekindled financial stability concerns as debt levels (both government and corporate) continue to rise at the same time interest rates rise due to oil-price-driven inflationary concerns.
Markets are into Q2 earnings season and while earnings growth has been relatively satisfactory, the sustainability of high expectations is being tested. In Q2, strong equity performance essentially paid for a financial economy that is proving to be increasingly elusive.
The crystal ball is anything but clear. We do not see quick resolution to the global conflicts, we do not see inflation rates easing in the near-term, and we are skeptical that increasingly expensive AI will lead to the much-touted productivity gains many call for.
In our view, markets are coming to realize that we are in a low-return world, one where protecting the above-average gains of the past few years is increasingly more important than one more trip around the AI-driven growth expectation track.
In this environment, we hold more-than-average cash, less-than-average debt, and dividend-paying equities with a bias towards Hard Assets. Short-term debt, particularly U.S. pay with 4 per cent plus yields, is attractive as a silo to protect assets. Dividends pay us while we wait. Growth remains expensive.
Diversification is more important than ever. Our preference is for hard assets (energy, pipelines) that provide income as well as inflation protection. Themes/factors more important than sector/geography in current environment.
TOP PICKS:
ExxonMobil (XOM NYSE)
XOM is more than an oil stock. Rather, XOM is a free cash generator that diversifies equity portfolios from their high over-concentration in large cap technology. We do not believe that there will be a return to the pre-Iran war energy market. In the absence of a global recession, it is hard to see oil prices returning to the US$60 level any time soon. We have lots of Canadian natural gas exposure in portfolios; needed an asset to diversify into international oil.
iShares MSCI South Korea ETF (EWY NYSEARCA)
EWY is not for faint of heart. Indirect play on two memory chip makers, Samsung and SK Hynix, which comprise 50% of ETF. Both trade cheaper than Micron (MU). Provides non-U.S. exposure to growth. Diversification. Memory chips trade at 1/3 levels of megacap hyperscalers. Growth looks solid through 2027, and these companies have a nice cash problem – too much! They can buy back shares at a time when others still investing. Issue/risk is whether these memory companies will over-expand, as they have one in the past. Dividend at one per cent, same as S&P.
Stryker (SYK NYSE)
SYK was hurt in Q1 by a data breach that occurred at the same time there was a general reversal in medical appliance stocks. Stock trades at 20x 2027 earnings, cheaper than the market with double-digit growth. (Consensus is US$15 in 2026; US$16.75 in 2027 and US$18.75 in 2028). SYK is a play on aging – boomers, especially active boomers, looking to sustain lifestyles. Health Care (like Energy) is a sector rotation play as well; great target if money rotates out of AI/Tech.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| XOM NYSE | Y | Y | Y |
| EWY NYSEARCA | Y | Y | Y |
| SYK NYSE | Y | Y | Y |
Past Picks: July 18, 2025
Agnico Eagle (AEM TSX)
Then: $161.61
Now: $207.20
Return: 28%
Total Return: 30%
AMD (AMD NASD)
Then: US$156.99
Now: US$504.96
Return: 222%
Total Return: 222%
Vermilion Energy (VET TSX)
Then: $10.83
Now: $15.49
Return: 43%
Total Return: 48%
Total Return Average: 100%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| AEM TSX | Y | Y | Y |
| AMD NASD | N | N | N |
| VET TSX | Y | Y | Y |
