Defensive sectors rise to the fore

arobinson@globeandmail.com

What are we looking for?

Picking the right sector in which to invest is critical for stock portfolio performance.

Today we take a look at the picks of Ron Meisels, president and technical analyst for Phases and Cycles Inc. Mr. Meisels has recently been hired as a consultant to the Caldwell Canada Fund, which has changed its name to Caldwell Meisels Canada Fund. Mr. Meisels and his team will provide research to the fund to help determine both its sector weightings and the individual stock picks.

Here is the list of stocks he expected will outperform the S&P/TSX 60.

Mr. Meisels also writes a technical feature for Saturday Report on Business titled "What the Charts Say."

More about the TOP60

Mr. Meisels' approach to the market as a technical analyst is based on the relative performance of the groups in the S&P/TSX 60; he then tries to target the companies that are likely to outperform within those groups.

It's not a purely quantitative, numbers-driven approach, he said.

At times the selections will reflect an overall enthusiasm based on the moving averages of the major indexes, but an assessment is also made as to whether a move by a particular company may be coming to an end as sentiment indicators change.

The changes can also reflect cyclical trends in the market as to what are likely to lead or lag a recovery.

What we found

The portfolio is taking a defensive stance in that it is overweight the consumer discretionary, consumer staples, telecom and utility sectors as well as the industrial group, which includes the Canadian railways.

Meisels' TOP60 performance

During the past year the TOP60 has increased 10.4 per cent, compared with an 8.2-per-cent gain on the S&P/TSX.

In the past five years, the TOP60 has risen at a compound annual rate of 5.2 per cent, compared with 3.5 per cent annual gain for the S&P/TSX 60 index.

******