Stephen Takacsy Reveals Top Stocks for June 2024
What Are the Best Stocks to Watch in June 2024 According to Stephen Takacsy?
Editorial Team (ET)June 13, 2025
Stephen Takacsy, the President, CEO, and CIO of Lester Asset Management, has established a reputation for his keen market insights and strategic stock picks. His current outlook for 2024 reveals a favorable environment for both stocks and bonds, shaped by unique economic trends and significant investment opportunities in Canadian markets.
Market Outlook
Takacsy believes that inflation was always going to be transitory, declining naturally as supply chains and demand returned to normalcy. Contrary to popular belief, he suggests that the rapid interest rate hikes by central banks may have exacerbated inflation, particularly through rising shelter costs in Canada. This has been compounded by massive immigration and a persistent housing shortage.
The positive news is that central banks have shifted their approach, cutting rates to alleviate these pressures. Despite the higher rates seen recently, the North American economy has shown resilience, with a robust job market and high savings rates. Takacsy envisions a potential "goldilocks" scenario where disinflation or even deflation occurs, allowing for further rate cuts without stifling economic growth. Even if the economy weakens, it could prompt deeper and faster rate cuts, which would still be beneficial for the market.
Canadian Fixed-Income and Equity Markets
In this context, the Canadian fixed-income market stands out for its attractive returns, particularly in corporate bonds and preferred shares. These investments offer inflation-beating yields in the six to seven per cent range, providing equity-like returns with very low risk.
The Canadian equity market also presents compelling opportunities. Small and mid-cap stocks, which have been undervalued due to institutional outflows and mutual fund redemptions, offer significant value. Private equity firms and strategic buyers have taken notice, snapping up Canadian companies at substantial premiums. Recent acquisitions in Takacsy's portfolio, such as Logistec, MDF Commerce, and Park Lawn, highlight this trend. Just recently, Copperleaf and Canadian Western Bank joined this list of strategic acquisitions.
Large-cap dividend stocks are another area of interest, particularly in sectors like telecoms, energy infrastructure, and banks. For instance, Telus yields an impressive seven per cent, Enbridge offers 7.5 per cent, and BMO provides a 5.4 per cent yield, making them attractive for income-focused investors.
Top Stock Picks
Neo Materials (NEO TSX)
Neo Materials is a standout company in the rare earth processing industry and the manufacture of materials for magnets used in micro-motors. With a significant presence in the automotive, electronics, semiconductors, and specialty chemicals industries, Neo is well-positioned for growth, especially in the electric vehicle (EV) market. The company's stock is currently undervalued, trading at around $7, which is significantly below its tangible book value. Neo is profitable, generates strong cash flow, has no debt, and is aggressively buying back shares. With a market cap of only $300 million, there’s considerable upside potential, with the stock potentially tripling or even quadrupling in the coming years.
High Liner Foods (HLF TSX)
High Liner Foods is a leading supplier of frozen seafood in North America, dominating both the retail and food service sectors. Despite recent sales stagnation, the company is poised for a turnaround as consumer confidence improves. High Liner has raised its dividend by 30 per cent in the past 18 months, paid down debt, and bought back shares. Trading at a cheap valuation of under six times EBITDA and a seven times P/E, High Liner is a classic value stock with significant upside potential. Insiders own 40 per cent of the company, aligning their interests with shareholders. The company is expected to be sold to a larger food company for a substantial premium.
Definity Financial (DFY TSX)
Definity Financial, Canada’s seventh-largest property and casualty insurance company, is another of Takacsy's top picks. Specializing in auto and property insurance, DFY has seen a recent stock pullback, creating a buying opportunity for investors. The company is growing faster than its competitors and is positioned to expand its return on equity to the mid-teens. Despite its strong growth, DFY trades at a significant discount to its peers, offering substantial potential for gains.
With Swiss Reinsurance acquiring 10 per cent of DFY, there is a possibility of a creeping takeover. Takacsy expects the stock to trade at over two times its book value, with a target price of $60+ within a year. This makes DFY an attractive option for investors looking for growth in the insurance sector.
Conclusion
Stephen Takacsy's market outlook for 2024 is optimistic, highlighting a favorable environment for both stocks and bonds. The Canadian fixed-income market offers attractive returns, particularly in corporate bonds and preferred shares. The equity market, especially small and mid-cap stocks, presents compelling value, with private equity firms and strategic buyers showing keen interest. Large-cap dividend stocks in sectors like telecoms, energy infrastructure, and banks also offer substantial yields.
Takacsy's top picks, Neo Materials, High Liner Foods, and Definity Financial, each have unique strengths and significant upside potential. Investors looking for strategic opportunities in the Canadian market should consider these insights to make informed investment decisions.
