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Gordon Reid is president and CEO of Goodreid Investment Counsel. His focus is U.S. equities.

Top Picks:

American International Group (AIG NYSE)

AIG has been a favourite of Goodreid since it got out from under its U.S. government obligations under TARP. It trades at only 70 per cent of book value, is increasing its earnings power with each passing quarter, and is improving its capital allocation policy. Look for a combination of organic growth and an expanding multiple to drive its share price.

Beacon Roofing Supply (BECN NASDAQ)

Beacon Roofing Supply is the second largest roofing company in the U.S. roofing growth is expected to be in excess of 6 per cent annually over the next few years, and given that 80 per cent of Beacon's residential roofing revenue come from re-roofing and 60 per cent of U.S. homes were built prior to 1980, this bodes well for the company.

Ensco (ESV NYSE)

Deep water drillers have been beaten down over the past six months, creating an opportunity to capitalize on an over-reaction. Ensco has the youngest fleet in the industry, a revenue backlog representing over two years of revenue, and a management group that is committed to enhancing shareholder value.

Past Picks: December 3, 2013

CVS Health (CVS NYSE)

Then: $66.75; Now: $90.87 +36.13%; Total return: +38.14%

TeleTech Holdings (TTEC NASDAQ)

Then: $24.98; Now: $24.03 -3.80%; Total return: -3.80%

Ensco PLC (ESV NYSE)

Then: $59.31; Now: $39.90 -32.73%; Total return: -28.78%

Total return average: +1.85%

Market outlook:

After withstanding a volatile time in October, the equity markets have entered a very positive seasonal period. Record high levels of equity markets seem to be reported daily, but the fact is that equities are meandering higher as opposed to surging. As we likely enter a period of interest rate tightening in 2015, the question of whether the market can maintain current valuation levels will be paramount. Position portfolios in companies with identifiable growth catalysts and maintain a critical eye on valuation.

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