Sherritt International (S TSX)

Sometimes it pays to be at the right place at the right time. Sherritt has long been a value trap for investors, trading at substantial discount to its book value. Part of this is due to its continued presence in Cuba which precludes U.S. investments, but it’s viewed as lacking focus and being over-leveraged. Recently it divested its coal business and significantly improved the balance sheet. Fortuitously, Indonesia has enforced an export ban on raw nickel ores, cutting off 25 per cent of the global supply, just as Sherritt’s new mine came on stream. There should be a lot of upside left in the stock.

Tricon Capital Group (TCN TSX)

Tricon is traditionally a North American real estate manager that offers its service to outside investors, as well as invests as an principal. Its timely entry into the U.S. residential housing leasing and development market brings the prospect of above-average returns as the U.S. housing market continues to recover from the depth of the great real estate bust. Investors can look forward to future capital gains for this business as well as current leasing income as protection. Potential securitization of the lease income stream may lower funding costs and free up capital for further investments. Initiatives in manufactured housing leases may also add to the upside.

Past Picks: December 2, 2013

Starbucks (SBUX NASDAQ)

Then: $81.07; Now: $76.79 -5.28%; Total return: -4.25%

Tricon Capital Group (TCN TSX)

Then: $7.54; Now: $7.85 +4.11%; Total return: +6.55%

Equity Financial (EQI TSX)

Then: $12.21; Now: $9.31 -23.75%; Total return: -23.75%

Total return average: -7.15%

Market outlook:

Despite a multitude of potential negatives like the geopolitical tension in Ukraine and Iraq/Syria, and the pending completion of the large-scale treasury purchase by the U.S. Federal Reserve, markets have been very resilient, with indexes reaching records and bond yields at multi-year lows. As we enter the historically volatile fall season, markets may pause for breath. However, global economies continue their slow but steady recovery, with the U.S. leading the way. China is in the process of stabilizing. Japan and Europe are fighting hard to keep their recovery alive. Central banks around the world continue to focus on keeping interest rates lower for longer in an attempt to stimulate growth. This will continue to underpin the financial market for the foreseeable future.