Greg Newman's Top Picks: BCE, Enbridge, Bank of Montreal
We expect S&P earnings to rise about 25 per cent in 2021 and about 14 per cent in 2022. For the TSX we model 43 per cent in 2021 and 12 per cent in 2022 due to an over concentration in metals, financials and oil.
This growth combined with excess savings, low rates, fresh stimulus and pent up demand probably justify valuations where they are at around 21.5x our 2022E PE. While some parts of the market are pricey, many areas are still reasonable.
That said, bullish consensus combined with a strong run could lead to a period of digestion. But the bigger risk is not being invested enough.