TopPicks from Stan Wong, portfolio manager at Scotia Wealth Management
Stan Wong, portfolio manager at Scotia Wealth Management, discusses his top picks: Chevron, Visa, and Walt Disney.Chevron is one of the world’s largest integrated energy companies and is forecasted to gross over US$225 billion in revenue for 2023. Chevron boasts approximately 11.3 billion barrels of proven reserves and produces about 3.1 million barrels of oil a day. The company’s downstream operations account for over 70 per cent of sales.
Like other large-cap energy companies, Chevron has been focused on returning excess cash to shareholders and keeping capital expenditures and production increases in check. Earlier this year, management announced a boost in its share buyback program to a ceiling of US$15 billion of stock. Chevron’s free cash flow yield of over 10 per cent remains very attractive. CVX currently pays an attractive three per cent dividend yield and reports its next quarterly results on Jan. 23.
With pent-up travel demand surging, Visa should benefit from more transactions in the higher margin cross-border segment. Overall, the U.S. consumer continues to appear resilient with recent retail sales data marching higher. Today, Visa boasts ample free cash flow, no material debt, and is forecasted to have predictable sales and earnings growth for the foreseeable future. Longer-term, the secular trend of electronic payments should have plenty of runway for growth.
Disney’s parks and resorts segment is expected to rebound strongly from the pandemic lockdowns as pent-up travel demand intensifies. The studio segment’s future looks strong with a strong slate of content ahead. Lastly, the return of Bob Iger to lead the company could also spark the stock price. DIS shares are down more than 50 per cent from last year’s highs, providing compelling value for savvy investors. The company reports its next quarterly results on Feb. 9.
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