Jason Del Vicario, portfolio manager at Hillside Wealth Management/iA Private Wealth

FOCUS: North American and global growth stocks

MARKET OUTLOOK:

Our thoughts never waver, regardless of the macro backdrop. If anything, we favour challenging economic periods as this is when deals are most readily available. We seek to buy high-quality companies at favourable prices. Our key defining factor of a “high quality” business is one that consistently generates strong returns on invested capital. We run a concentrated portfolio of 26 global businesses that meet our strict quality criteria. Our top 10 positions represent 70 per cent of our equity weighting.

We view multiple currency exposure as a strength (no hedging). We think and behave with a long-term mindset. When one’s investment time frame is decades and not months or weeks, short-term factors beyond our control such as interest rates, inflation and geopolitics become irrelevant, as we assume we’ll encounter all sorts of macro regimes over time. We own a collection of businesses that we feel can compound shareholder wealth strongly over decades.

Generally, every Market Call we will highlight three stocks we own that we feel represent the best value at the time. It's worth noting that for a high-quality and predictable business, the lower the price of the security, the higher the forward rate of return, and vice versa.

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TOP PICKS:

Evolution AB (EVO SWE)

Evolution AB is the world's largest casino and you've likely never heard of them. They provide the backbone for land and online-based casino operators' online casino presence. They are founder run/owned and command dominant market share of this space. They have no debt and their net margins of 60 per cent are some of the highest we've ever come across. We believe there is plenty of room for them to continue to grow and widen their competitive gap. They are trading a hair below 20x and sport a nice dividend yield of ~2.5 per cent; excellent value in our opinion. Evolution is our tenth largest holding at nearly four per cent weight. We have held since 2020 and last added at 1100 SEK September 2023.

Alimentation Couche-Tard (ATD TSX)

ATD sports one of the more consistent return-on-capital profiles we have ever encountered. ATD is an excellent example of the magic that can happen when strong operational execution meets efficient capital allocation. ATD has compounded shareholder wealth at ~20 per cent/year for the past four decades, and we believe can continue to do so. ATD is our sixth largest holding at a 5.5 per cent weight. Trading at 19x, we wouldn't consider them cheap per se, but rather fairly valued. We have held since inception (2014) and last added early 2021 at $37.

Tobila (4441 TOKYO)

Tobila produces and sells anti-spam software and operates with almost no competition in their home market of Japan. The barriers to entry to compete with them, we believe, are significant: the database of spam numbers, emails and such has been built over decades and is continuously evolving with input from their 15 million users and local/national police. The company is founder run/owned, has no debt and solid margins and returns on capital. They return capital to shareholders via dividends. Given they haven't a long public market history, we have chosen a small weight at this time; it is our 18th largest holding at nearly 1.5 per cent equity weight. We feel the current valuation is very compelling at less than 15x and 2 a per cent+ dividend yield. We have held since early 2022 and last added early April 2024 at 795 Yen.