Father and son team investment managers Bruce and Jamie Murray pick their two best stocks to buy—two each, that is.
What started out as a bull-market correction became a full-bore recession carried on the back of COVID-19, which has since swung back forcefully into a productive and profitable future in the making.
Such is the optimistic and forward-looking view of Toronto investment management firm Murray Wealth Group, led by father-and-son team Bruce and Jamie Murray. Bruce Murray, who founded the firm in 2015, serves as CEO and chief investment officer, while Jamie, who started out at Desjardins Capital Markets and then worked at Investors Group before joining Murray Wealth, is head of research and a portfolio manager.
New economy will grow from COVID wreck
The elder Murray has 40 years of institutional money management experience, most notably at McLean Budden (now MFS McLean Budden). The challenges of lost jobs and business closures today are laying the groundwork for a new economy to take hold, he suggests. “The pandemic allowed the creative destruction of capitalism to manifest, if you wish,” says Bruce, pointing to factors such as high real estate prices, heavy competition, and hard-to-manage operations in the restaurant industry and retail sectors as some of the underlying reasons for closures in the last year. “Now we believe we’re in for a substantial period of an upswing in the economy.”
Bruce says central banks and governments were more responsive to the economic crisis wrought by the pandemic than in the past, attributing their willingness to seek remedies to a lack of corporate wrongdoers to punish. “The productivity boost that has come out of this will make up for a lot,” he adds, noting that massive debt worldwide and receding economic activity emerged after the Second World War, but gave way to decades of prosperity.
Digital economy will thrive
Asked if vaccine delivery hiccups could lead to investor skittishness, Jamie points to performance in the last year and says, “The stock market is a lot longer-term-focused than it’s been given credit for. . . . Ultimately, whether you reach that peak vaccination velocity in March, April, or May, it affects the narrative (only) in the short-term.”
Looking ahead, Bruce sums up, “Companies that can manage digital assets are going to do better than those that can’t,” as the rocketing share prices of companies specifically geared towards remote interactions and commerce such as DocuSign Inc. (NASDAQ—DOCU) and Zoom Video Communications Inc. (NASDAQ—ZM) demonstrate.
A tech stock and a consumer stock to buy
The Murrays’ first “best buy” pick, Dutch cloud-based payments processor Adyen NV (AMS—ADYEN), is already a thriving leader in the digital revolution.
Since being founded in 2006, the company has carved out a 2.5 per cent share of the global payments market. “It just does the job better than its competitors,” says Jamie. In particular, its payment tools are handy for international companies because they can seamlessly consolidate and break down sales from a variety of sources (in-store, online, mobile and so on) and geographic markets.
Clients include retail-support giants Shopify Inc. and Etsy Inc.; it will complete its transition into eBay Inc.’s primary payments processor this year. It has recently shifted focus toward North American expansion, where there are fewer behind-the-scenes issues with tying banking between jurisdictions compared to its current core area of operations, Europe (due to fewer jurisdictions existing).
Their second “best buy”, women’s clothing retailer Aritzia Inc. (TSX—ATZ), garners the Murrays’ praise for its steady expansion into the United States (at a rate of six or seven stores annually; they currently have about 30 locations south of the border and 65 to 70 in Canada). Spreading its offerings across a range of in-house brands ensures their offerings remain relevant to consumers and helps them manage inventory. “They’ve always sort of managed a conservative level of debt,” Jamie adds, prompting confidence that it can keep stores open while investing in itself.
2 ‘best buys’ x 2 analysts = 4 ‘best buys’
The Murrays’ other two “best buy” selections are giants in their fields poised to rise anew: uranium miner Cameco Corporation (TSX—CCO; NYSE—CCJ) and advertising agency WPP PLC (LON—WPP; NYSE—WPP).
Uranium stockpiles have run low while its miners suffered after the 2011 Fukushima Daiichi disaster. However, demand is due to rise soon with around 50 nuclear reactors being built worldwide (compared to 150 running today). Recent energy issues in the Southern US indicate the need for existing plants to stay open as well.
After peaking in 2017, WPP’s share price halved in 2019 as big companies moved away from traditional, big-ticket advertising (like Super Bowl ads) and halved again during the pandemic. WPP has since moved towards more granular, targeted advertising, for example finding potential car buyers on Facebook and guiding them toward Ford. One of the world’s top ad agencies, Bruce says, “They peaked out at . . . US$13 billion (in sales). We bought in at US$10.5 billion.” The Murrays hope for US$500 million in growth annually.
This is an edited version of an article that was originally published for subscribers in the March 5, 2021, issue of Investor’s Digest of Canada. You can profit from the award-winning advice subscribers receive regularly in Investor’s Digest of Canada.
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