2015 Outlook

December 1, 2014
Investment Strategy
2015 Market Outlook
Brian G. Belski
Chief Investment Strategist
BMO Capital Markets Corp.
212-885-4151
brian.belski@bmo.com
Nicholas Roccanova, CFA

Sr. Investment Strategist
BMO Capital Markets Corp.
212-885-4179
nicholas.roccanova@bmo.com
This report was prepared in part by an analyst(s) employed by a Canadian affiliate, BMO
Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules.
For disclosure statements, including the Analysts Certification, please refer to pages 51 to 53.
Ryan Bohren, CFA

Associate
BMO Nesbitt Burns Inc.
416-359-4993
ryan.bohren@bmo.com
2015
Market Outlook
BMO Capital Markets
Table of Contents
Executive Summary ................................................................................... 5
2015 Market Outlook .................................................................................. 7
Investment Themes.................................................................................. 14
Sector Recommendations ........................................................................ 21
Implementation Strategies ....................................................................... 38
A member of BMO
Financial Group
December 1, 2014
2015
Market Outlook
A member of BMO
BMO Capital Markets
Financial Group
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Executive Summary
The 2015 Market Outlook is our annual Investment Strategy publication that encapsulates
our conclusions, recommended investment processes, and implementation strategies for the
year ahead. The report includes opinions for both the US and Canadian equity markets.
2015 Market Outlook

Given the combination of improving economic conditions and rebounding earnings growth,
we believe 2015 will represent another year of solid gains for US stocks. Our models suggest
a year-end S&P 500 price target of 2,250 on EPS of $126. This would represent a 9.7% gain
and earnings growth of 8.6% based on our 2014 forecasts. Both of these forecasts are largely
in line with mid-cycle secular trends. In addition, we see very little risk of a bear market
developing in the coming year, but slightly above-average valuation makes significant gains
more difficult. Furthermore, unlike the past few years we expect more frequent periods of
volatility, which, in our view, strongly favors fundamental over momentum-based strategies.
By contrast, although we expect Canada to post positive returns in 2015, the S&P/TSX will
likely underperform the US for the fifth consecutive year. Indeed, we expect Canada to
become increasingly correlated to US strength; however, sentiment around EM and Europe
will continue to drive broad swings above and below our target.
Investment Themes
From our perspective, the major theme over the next several years will be all about the
redistribution of corporate and private capital as doubt and fear subside alongside a North
American economy that continues to improve. It is common knowledge that corporations
have been sitting on enormous cash piles yet have been reluctant to invest in their businesses.
Instead, they have focused on share buybacks, which investors had been rewarding. However,
this approach seems to be losing investors favor and the next logical step is for companies to
ramp up capex to generate growth, in our view. On the other hand, memories of the financial
crisis has steered many private investors away from the traditional investment goal of wealth
creation, to wealth preservation. Given a strong stock market and the likelihood that interest
rates will be higher in the coming years, we believe investors will look toward stocks for both
wealth preservation and generation in the coming years.
Sector Opinions
In the US, we continue to favor Financials, Industrials, and Information Technology within
portfolios. Each sector contains fundamental attributes and themes that will benefit from the
stronger-than-expected US economic recovery that we believe will occur over the next
several quarters. For Canada, we favor Financials for broad stability and dividend growth;
Industrials for direct exposure to US strength; and Telecommunications for an improving
earnings outlook and good relative value.
Implementation Strategies
In terms of portfolio construction, we believe investors should focus on four main themes:
large-cap over small cap; value over growth; quality and consistency of earnings; and
dividend growth.
A member of BMO
Financial Group
December 1, 2014
2015
Market Outlook
A member of BMO
BMO Capital Markets
Financial Group
December 1, 2014
2015
Market Outlook
BMO Capital Markets
2015 Market Outlook

Adventures of the Stealth Bull Market
Our longer-term bullish stance regarding US stocks remains firmly intact. To that end, we
believe 2015 will represent another year of moderate gains, marking the seventh consecutive
year without a loss for the S&P 500. In addition, we continue to believe that the current bull
market is part of a longer cycle that will eventually last 15-20 years in totality. Nonetheless,
this has been a bull market whose underlying trend and proposed duration remains firmly
doubted and distrusted by most of our clients, in our view. In other words, this is the largest
stealth bull market of our collective careers, one that no one believes, and everyone is looking
over their shoulder to diagnose its end.
Admittedly, seven consecutive years without an annual loss is rare for US stocks, but not
totally unheard of based on history. In addition, we continue to believe most investors have
suffered an enormous amount of psychological damage stemming from America's lost decade
during the 2000s. After all, two recessions, multiple wars, 9/11, and mushrooming distrust of
corporate America were likely to take a toll. As such, we believe fear remains a primary
motivation as most investorsespecially private clientsremain cynical and distrusting of
American companies. However, this fear has caused investors to somewhat overlook the
massive structural reforms that US companies have undertaken ever since to position
themselves as one of the best fundamental assets in the world. For instance, most of our
clients discount the fact that US companies have the strongest balance sheets since in the
1950s, are growing dividends, and have the most stable earnings growth in decades.
Furthermore, the fear factor is omnipresent within Financials in particular, a sector that
admittedly had a significant part in the Great Recession, but will likely have just as big of a
role helping to re-create growth and wealth over the next decade, in our view. Therefore until
the faith factor increases and investors begin to accept the fundamental facts surrounding US
stocks, reactions will continue to rule the roost, providing disciplined investors an opportunity
to add to core positions.
Exhibit 1: Stages of Secular Bull Markets
Reaction
High correlations
Reliance on indexing
Swings in volatility,
earnings and multiples
Outflows from mutual
funds
Low trading volume
Apathy and doubt of
current trend
Acceptance
Low correlations
Active investing to generate
alpha
Consistent earnings growth
Steady multiples
Improving sentiment
Increased trading volume
and return of asset inflows
Euphoria
Outsized winners and
losers
Sharp upside moves and
corrections
The creation of new
products and strategies
Outsized asset inflows
2015 will represent a

transition toward this type of
environment
Source: BMO Capital Markets Investment Strategy Group.
A member of BMO
Financial Group
December 1, 2014
2015
Market Outlook
BMO Capital Markets
S&P 500 2015 Price Target: 2,250; EPS: $126

We believe the S&P 500 Index will achieve a year-end 2015 price target of 2,250 on earnings
per share of $126. While these assumptions equate to another year of positive returns for US
stocks, we continue to believe levels of equity engagement remain low (Exhibit 2), especially
compared to historical standards. Furthermore, we continue to believe US stocks remain a
beacon for the rest of the world in terms of fundamental stability and consistency. That being
said, stock prices are rarely linear for long and we anticipate a high likelihood of periods of
increased volatility akin to fall 2014, part of a normal corrective cleansing for any prolonged
bull market.
Summary of Price and EPS Target Model Internals:
Our price and EPS targets imply a 2015 year-end P/E of 17.8x, which would be
slightly higher than our expected 2014 level of 17.7x.
Given the stage of the economic cycle and persistently low interest rates, we also are
using a below-average cost of equity assumption of 780 bps.
Dividend growth expectations continue to provide positive trends for our models.
Revisions have stabilized and suggest average return potential.
Economic conditions, while improved, are still somewhat of a drag.
Exhibit 2: Levels of Equity Engagement Remain Low

Cumulative US Stock and Bond Flows
includes mutual funds & ETFs, $ billions
1600
1400
1200
1000
800
600
400
200
0
-200
-400
2007
Stocks
Bonds
2008
2009
2010
2011
2012
2013
Source: BMO Capital Markets Investment Strategy Group, ICI.
Exhibit 3: 2015 S&P 500 Targets

Price Target
Model
Dividend Discount Model
Fair Value Price-to-Earnings Model
EPS Revision Model
Category
Fundamental
Valuation
Mean Reversion
Expected Return*
Prior Year End S&P 500 Close*
Price Target
2015E
2,250
2,200
2,150
Earnings Per Share Target

Model
Macroeconomic Regression Model
Bottom Up Mean Consensus Expectation
Normalized EPS
9.7%
2,050
2,250
Expected EPS Growth*

Prior Year S&P 500 EPS*
EPS Target
Category
Macro
Fundamental
Mean Reversion
2015E
$128
$128
$121
8.6%
$116
$126
Implied P/E:
17.8x
Source: BMO Investment Strategy Group. *Based on our 2014 target.
A member of BMO
Financial Group
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Fundamental and Macro Data Suggest Middle-of-the-Road Returns

P/E Levels Makes Continued Double-Digit Gains More Difficult . . .
Based on our own estimates, the S&P 500 will end 2014 with a P/E of roughly 17.7x.
Although this is slightly above historical norms, valuation is by no means grossly overvalued.
However, our analysis suggests it may be more difficult for the market to continue its
impressive run given these valuation levels. We found that, following similar P/E levels,
market returns have been lackluster, on average, in subsequent holding periods (Exhibit 4)
and only when EPS was growing at a double-digit rate. In fact, it took EPS growth rates of
roughly 10% or greater for the market to deliver double-digit returns during these periods
(Exhibit 5). Although earnings growth has certainly improved lately, we believe productivity
and profit margins trends will make it difficult for EPS to achieve such growth over the near
term. As a result, we believe this provides further evidence that the multiple expansion part of
this cycle has largely played out, while future gains will likely require good old fashioned
earnings growth. Fortunately, economic conditions continue to trend in the right direction,
making it highly probable that better earnings growth is more achievable longer-term.
Exhibit 4: S&P 500 P/E Ratio and Subsequent Price Returns

S&P PE Ratio (actual)
Less than 10x
Between 10x and 15x
% of Monthly
Observations
11.3%
27.9%
1-Year
13.8%
11.9%
3-Years
10.1%
9.5%
5-Years
11.4%
8.2%
10-Years
11.3%
9.7%
Between 15x and 20x
41.3%
7.0%
5.3%
4.8%
4.6%
Greater than 20x
19.5%
2.3%
4.9%
5.4%
3.9%
Source: BMO Capital Markets Investment Strategy Group, Bloomberg.
Exhibit 5: Valuation Makes Big Gains More Difficult in the Absence of Robust EPS Growth
S&P 500 Forward Performance Given P/E Levels and Subsequent EPS Growth
14%
11.7%
12%
10.4%
10%
8%
9.0%
7.0%
5.3%
6%
4.8%
4%
2%
0%
1-year
3-years*
P/E levels Between 15x and 20x
5-years*
P/E levels Between 15x and 20x and EPS Growth 10% or better
A member of BMO
Financial Group
December 1, 2014
2015
Market Outlook
BMO Capital Markets
. . . but Market Breadth and Macro Trends Suggest a Bear Market Is a Remote Possibility
Certain investors are becoming convinced that market performance has been displaying many
signals of top behavior. While their arguments seem convincing at first glance, we believe
they lack the proper context from an investment strategy point of view. Although we do not
discount the possibility of periods of market weakness given the stage of the current cycle,
nothing in our work suggests an imminent end to the current bull market. Therefore, we
remain confident in our secular bull market thesis and would urge investors to be
opportunistic during market pullbacks.
For the bearish crowd, much has been made of "poor market internals" as the defensive
Health Care and Utility sectors have been leading the market. However, a closer look at
market performance reveals a different storythere is still relatively broad participation
across the market. We have found through our work that bull markets are typically nearing
their end when leadership significantly narrows. As it stands, roughly half of the S&P 500 is
still outperforming (over the past year), which remains around the longer-term average
(Exhibit 6, left). By contrast, we found that prior bull markets since 1970 ended when this
indicator dropped to a significantly low reading.
More important, our work shows that the longest and most painful bear markets have been
commonly associated with recessionssomething that we believe is a very low probability
event for 2015. This is especially evident given that leading indicators continue to improve. In
fact, one of the most tried-and-tested market indicatorsthe slope of the yield curve
suggests that bear market worries are overblown. For instance, every single post-war US
recession has been preceded by a significant narrowing or inverted yield curve (Exhibit 6,
right). Similarly, all non-recession bear markets have witnessed similar yield curve patterns.
Yet, despite some narrowing over the past few months the slope of the yield curve remains
very steep by historical standards.
Exhibit 6: Market Leadership and Slope of the Yield Curve Suggest Bull Market Remains Intact
% of S&P 500 Stocks Outperforming - Trailing 1 Year
Recession
Non-recession Bear Market
2012
2009
2006
2003
2000
1997
1994
1991
1988
1985
1982
Avg.
1979
Recession
% Outperforming Stocks
1976
Non-recession Bear Market
1973
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
20%
1970
30%
1967
40%
1964
50%
1961
60%
1958
70%
5
4
3
2
1
0
-1
-2
-3
-4
1955
80%
Yield Curve, Recessions & Bear Markets
3m/10y Slope
Source: BMO Capital Markets Investment Strategy Group, FactSet, Bloomberg, Federal Reserve.
A member of BMO
Financial Group
10
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Old Time HockeyPut Me in, Coach

One of the things market watchers love to do is try to define the current or forward market
environment by comparing it to a prior period or deriving a fancy new title. In terms of the
current bull market, which began in March 2009, it has been hard to diagnose an overall label
given the schizophrenic behavior of investors. For instance, investors chased low quality,
small cap, and commodities during most of 2009 and 2010, round-tripped EM from 2009 into
2011, and tried to bottom fish Europe and chase yield again in 2014. Granted, cycles and
styles come and go, but it continues to confound us that investors remain fixated on
everything but the fundamental condition of US stocks. As such, we continue to believe the
US has entered a multi-year period of outperformance, driven by fundamental investing,
bottom-up stock picking (Exhibit 7) with variables such as earnings stability, EV/EBITDA,
free cash flow and dividend growth driving performance. In other words, we believe we are
heading into a period akin to the 1980s and 1990swhen the US was seemingly the only
game in town because it was more fundamentally sound than other major markets. To be
clear, we do not believe stocks will end in the same spectacular fashion, but do believe there
are many more years of stock gains left. Furthermore, just because stocks go up, this does not
necessarily mean they are in a bubble. Bubbles are created by prolonged periods of excess
and emotion (e.g., credit and housing in mid-2000s; technology in the late 1990s). Rather, the
current period is more like "Old Time Hockey," and good old fashion investing, where we
skate with the puck, pass the puck, and shoot the puck.
Exhibit 7: Fundamental Factors Are Outperforming Again, Something We Expect to

Continue During 2015
Fundamental vs. Technical Factors Relative Price
1.10
1.09
1.08
1.07
1.06
10/14
9/14
8/14
7/14
6/14
5/14
4/14
3/14
2/14
1/14
12/13
11/13
10/13
9/13
8/13
7/13
6/13
5/13
4/13
3/13
2/13
1/13
1.05
Source: BMO Capital Markets Investment Strategy Group, FactSet, CompuStat, IBES.
The relative price line is derived by taking the simple average of the index levels of all fundamental factor profiles divided
by the simple average of all technical factor profiles. Fundamental factor profiles cover the valuation, actual growth,
estimated growth, and quality factor categories. Technical factor profiles also include high risk category. See latest US
Factor Profiles for more details.
A member of BMO
Financial Group
11
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Diffuse Fear With Fundamentals

Fear and emotion continue to be primary drivers of stock market momentum and opinion,
judging by our interactions with clients and companies over the past several months. In fact,
we believe at least three fear trades alone occurred in 2014. For instance, the dreaded "polar
vortex" during 1Q drove investors back into fixed income and yield product (especially
Utilities). Yet, the fundamental foundations of these instruments are less than desirable, with
Treasuries providing negative real rates of returns and many US utility stocks trading at or
near all-time valuation highs with anemic earnings and cash flow growth. In addition,
investors flocked to index funds for much of 2014 (especially during the summer), as stock
price correlations and prices moved higher together. We believe this behavior was driven by
investor fears of missing additional upside in US stocks given their relatively poor
performance relative to benchmarks. Lastly, investors received what they asked for when US
stocks delivered a near classic correction during September-October, driven mainly by Ebola
and international growth fears. However, calmer heads and fundamentals prevailed, as
investors realized quickly that the issues stemming from EM and Europe issues were old
news and Ebola was not going to become a pandemic, no matter how hard the media punched
the fright button. The way we see it, fundamentals almost always defeat fear and we
implore our clients to stick with their disciplines and styles over the next several quarters
even as doubts remain about the resiliency of the US in the face of rising interest rates, slower
growth in EM and Europe, and deflationary pressures stemming from the slide in
commodities. As you can see from Exhibit 8, the fundamental and macro backdrop has
continued to improve despite all the obstacles along the way.
Exhibit 8: Economic Conditions Continue to Improve and Rebounding EPS Growth Reflects This
15%
60%
10%
40%
5%
20%
0%
8%
0%
7%
-5%
6%
-10%
-15%
-40%
-20%
-25%
1990
1995
2000
2005
2010
S&P 500 (Y/Y % Chg.)
5%
4%
3%
2%
1/13
2/13
3/13
4/13
5/13
6/13
7/13
8/13
9/13
10/13
11/13
12/13
1/14
2/14
3/14
4/14
5/14
6/14
7/14
8/14
9/14
10/14
-20%
-60%
1985
S&P 500 Trailing 4 Quarter EPS Growth
Leading Indicator Index (Y/Y % Chg., rhs)
Source: BMO Capital Markets Investment Strategy Group, Bloomberg, Conference Board, IBES.
A member of BMO
Financial Group
12
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Three- to Five-Year US Stock Return Outlook

As we have mentioned, we believe US stocks are mired within a secular bull market.
Historically, these cycles have lasted roughly 15 years. In addition, there have been clear
return and volatility patterns within each stage of the cycle. Given our view that the market is
transitioning toward the second stage of a secular bull market (acceptance), we believe US
stocks are poised to provide average returns of 8-10% for at least the next three to five years,
similar to historical norms. Furthermore, since volatility is typically higher during this stage,
we believe corrective phases are not out of the question and some years may be better or
worse than the average (or even negative). Nonetheless, the return structure of US stocks
remains positively disposed relative to other regions and asset classes, in our view.
Exhibit 9: This Bull Market Has Tracked Other Secular Cycles Reasonably Well . . .
Something We Expect Will Continue in the Coming Years
Normalized S&P 500 Price Performance of Secular Bull Markets
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0
10
Years Into Secular Cycle

Average of Prior Two Post War Secular Bull Markets
Current
Exhibit 10: US Stocks Are Entering Into a Period of Somewhat Lower and More Volatile Returns
S&P 500 Compounded Annual Returns During Secular
Bull Market Stage
20.0%
S&P 500 Average Std. Dev. of Monthly Returns During

Secular Bull Market Stage
18.8%
16.8%
17.5%
4.4%
4.2%
15.0%
4.0%
12.5%
4.5%
4.6%
4.0%
3.8%
10.6%
3.6%
10.0%
3.3%
3.4%
7.5%
3.2%
3.0%
5.0%
First 5 Years
Next 5 Years
Remaining Years
First 5 Years
Next 5 Years
Remaining Years
December 1, 2014
A member of BMO
Financial Group
13
2015
Market Outlook
BMO Capital Markets
Three- to Five-Year US Stock ThemeRedistribution of Corporate and

Private Capital
Corporate Cash to Provide Engine for Growth, Benefitting Industrials and Technology
We continue to believe a burgeoning capex recovery is occurring within the US. This is due
to the defensive nature of corporate America over the past few years, driven in part by their
general reluctance to invest cash into the businessaside from share buybacks, which we
viewed as an effort to boost EPS numbers. While this strategy had worked out well for a
while, it appears that investors are beginning to lose their appetite for buybacks. For instance,
the performance of companies with the greatest amount of buybacks has been roughly flat
over the past year and has actually deteriorated moderately over the past few months (Exhibit
11). From our perspective, this suggests that sooner or later companies will need to invest in
their businesses to provide themselves and investors with future growth opportunities.
Exhibit 11: Share Buybacks Are Starting to Lose Their Appeal

Relative Total Return of Top 50 Stocks With Highest Amount of Share
Repurchases over the Past Year
4.1
3.9
3.7
3.5
3.3
3.1
2.9
2.7
2.5
1/11 3/11 5/11 7/11 9/11 11/11 1/12 3/12 5/12 7/12 9/12 11/12 1/13 3/13 5/13 7/13 9/13 11/13 1/14 3/14 5/14 7/14 9/14
Source: BMO Capital Markets Investment Strategy Group, FactSet, CompuStat.
Exhibit 12: Corporate Cash Remains at Historic Levels

Nonfinancial Corporate Cash
$ billions, deposits plus short-term securities
1800
1600
1400
1200
1000
800
600
400
200
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
Source: BMO Capital Markets Investment Strategy Group, BEA.
A member of BMO
Financial Group
14
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Several secular trends are also providing the impetus for increased capex spending. For
instance, investment spending as a percentage of GDP, while recovering lately, remains low
from a historical perspective (Exhibit 13). Furthermore, the average age of plant and
equipment is at its highest levels in 50 and 15 years (Exhibit 14, right), respectively. The way
we see it is that there is a tremendous amount of pent-up investment spending demand and,
given the abovementioned, we believe the next logical step for companies to improve growth
prospects is to invest in their businesses. Finally, the enormous pile of cash sitting on
corporate balance sheets (Exhibit 12) makes the case even stronger, particularly as economic
conditions continue to gradually improve and the fear factor is removed from corporate
management consciousness.
Exhibit 13: Investment Spending Has Rebounded, but Remains Too Low
Private Investment as % of GDP
22%
Average
20%
18%
16%
14%
1964
1965
1967
1968
1970
1972
1973
1975
1976
1978
1980
1981
1983
1984
1986
1987
1989
1991
1992
1994
1995
1997
1999
2000
2002
2003
2005
2006
2008
2010
2011
2013
12%
Exhibit 14: Plant and Equipment Are Aging

Average Age of Equipment & Structures
7.8
23
Equipment
7.6
23
Structures (rhs)
7.4
22
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
19
1984
6.2
1982
20
1980
6.4
1978
20
1976
6.6
1974
21
1972
6.8
1970
21
1968
7.0
1966
22
1964
7.2
A member of BMO
Financial Group
15
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Our overall market outlook, and more specifically our sector positioning, are based partly on
our expectation for a capex revival. As Exhibit 15 illustrates, we analyzed performance trends
for all capex cycles since 1970 and found that cyclical areas of the market tend to perform
significantly better when the overall level of capex is improving, specifically Energy,
Industrials, and Technology. Not so coincidently, we recommend Overweight positions for
two out of the threeIndustrials and Technologywhich we expect to be the main
beneficiaries when combined with solid fundamental conditions of both sectors. In Energys
case, we are less optimistic given what we view as a secular change in the supply and demand
dynamics of crude oil.
Exhibit 15: Cyclical Areas Benefit From Improved Capex

Average Relative Sector Performance During Improving Capex Cycles Since 1970
8%
5.8%
6%
5.2%
4%
2.5%
2%
0%
0.1%
0.0%
-2%
-1.1%
-1.2%
-1.5%
-4%
-6%
-6.3%
-8%
-8.6%
-10%
COND
CONS
ENRS
FINL
HLTH
INDU
INFT
MATR
TELS
UTIL
Private Investor Asset Positioning With Transition Toward Wealth Generation Benefiting Financials
The psychological damage stemming from Americas lost decade during the 2000s has
steered many investors away from the traditional investment goal of wealth creation, to
wealth preservation, in our view. As a result, investors have strongly preferred bonds over
stocks throughout this bull market despite the significant outperformance of stocks. Indeed, as
Exhibit 16 (left) shows, equity allocations within retirement plans (i.e., long-term investors)
are relatively low at roughly 50% of total assets. By comparison, equity allocations
approached 65% during prior bull markets. Again, we believe this is a reflection of the 10
years leading up to the financial crisis where stocks significantly underperformed bonds.
However, while we do not expect a rapid increase of interest rates, we do believe things are
slightly different this time around. Remember, interest rates were much higher then and had a
lot further to drop to propel bond gains (Exhibit 16, right). Nowadays, interest rates are still
hovering around historic lows. Therefore, given relatively low equity allocations, significant
outperformance of stocks and the likelihood that rates will be higher rather than lower in the
next three to five years, we believe it makes sense for investors to increase stock allocations
in order to both generate and preserve wealth. And once investors come to this realization that
A member of BMO
Financial Group
16
December 1, 2014
2015
Market Outlook
BMO Capital Markets
bonds may become capital destructors in retirement portfolios, we expect a significant

redistribution of capital toward equities.
From our perspective, the main beneficiary of this would be Financials. Historically, the
sector has outperformed during periods of increasing equity allocations given all that this
would entail (e.g., more transactions, higher margin investment products, capital appreciation
on AUM, and associated fees, etc.). Unfortunately, this relationship has broken down in
recent years, which we believe is based on the misguided views regarding regulatory
constraints. For instance, even with more stringent capital requirements, sector valuation
should be at least 20% higher based on our analysis. As such, an eventual redistribution
toward equity assets and subsiding worries regarding regulatory constraints will provide
powerful tailwinds for Financials in the coming years, in our view.
Exhibit 16: Low Equity Allocations and Interest Rates Could Propel Financials in the Coming Years
0.40
70%
65%
0.35
60%
55%
0.30
50%
0.25
45%
40%
0.20
35%
30%
0.15
25%
0.10
Financials vs. S&P 500
12.7%
Stocks = S&P 500
Bonds = ML Domestic Bond Master Index
-0.1%
-2.2%
-5.1%
Prior 10 Years
1990
1991
1992
1993
1995
1996
1997
1998
2000
2001
2002
2003
2005
2006
2007
2008
2010
2011
2012
2013
20%
14%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
2009 thru Current
Average Annual Excess Total Return: Stocks vs. Bonds
Equity Allocation in Retirement Plans
Change in 10 Yr Tsy Yield
Source: BMO Capital Markets Investment Strategy Group, Bloomberg, Federal Reserve, Haver, Merrill Lynch Bond Indices.
Topics to Consider Heading into 2015

The Fed tap dance. As the economic data improve in America but disintegrates in both EM
and Europe, uncertainty surrounding the Fed will likely only increase in 2015.
BMO view: While we certainly do not expect another round of QE, we believe the Fed will
err to the side of caution before tipping its hand in terms of a change in policy. However, we
do believe investors should be patient as there will be plenty of time to adjust portfolios
accordingly. Granted, we have now reared an entire generation of investors that believe
higher rates are bad for stocks. To the contrary, a change in Fed policy will only bring
credibility to the fundamental improvement of US stocks. Therefore, any reactive moves to
the downside will be exactly thatreactionsthereby providing opportunities for more
disciplined investors. As such, we believe the US has entered a multiyear period in which
stock prices, earnings, the economy, and dollar will all be positively correlated.
A member of BMO
Financial Group
17
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Exhibit 17: Fed Rate Hike Should Not Be a Concern, Particularly Given the Size of the Fed Balance Sheet
5000
Average S&P 500 Performance Following Initial Fed

Rate Hike Preceded By a Prolonged Period of
Accommodative Policy - All Periods Since 1970
20%
4000
15.4%
3000
1000
2000
6.0%
5%
1500
0%
1000
500
500
-2.5%
Federal Reserve Balance Sheet Assets ($ billions)
9/14
5/14
1/14
9/13
5/13
1/13
9/12
5/12
1/12
9/11
5/11
1/11
9/10
5/10
1/10
1/09
30 Days
Subsequent 3 Subsequent 6 Subsequent 1 Subsequent 2
Following Rate
Months
Months
Year
Years
Hike
(annualized)
9/09
-10%
5/09
-5%
1500
2500
9.9%
10%
2000
3500
16.8%
15%
2500
4500
S&P 500
Source: BMO Capital Markets Investment Strategy Group, Federal Reserve.
Common sense will increase. As the cycle matures, good news will eventually become
goodand bad will become bad.

BMO view: With only about 10% of US fund managers outpacing the market in 2014 and
hedge funds massively underperforming, a change in investment process is likely to occur.

From our lens, this means a prolonged period of active investing is upon us, thereby
overtaking the macro or index biased ways that have engulfed investing the past 15 years.
Why now? The more managers underperform, the more they will be forced to change their
stripes. In addition, based on our work, fundamental stalwarts such as EV/EBITDA, price to
free cash flow, and operating metrics like ROE and ROA continue to outperform
dramatically.
Exhibit 18: Fund Managers Have Had an Awful 2014

% of Outperforming US Equity Fund Managers
2014 Cumulative Price Return
top 200 US mutual funds by AUM
through Oct. 31st
90%
10%
dotted line represents average
80%
70%
60%
8%
Credit Suisse
Hedge Fund Index
6%
S&P 500
4%
50%
40%
2%
30%
0%
20%
-2%
10%
-4%
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
0%
-6%
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
A member of BMO
Financial Group
18
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Capex requires a change in behavior. Prospects for the manufacturing renaissance,
increased on-shoring, and capex remain more myth than fact.

BMO view: Admittedly, multinational companies have been exporting capacity for decades in
hopes of increased operating efficiencies and lower costs. However, we believe those days are
coming to a screeching halt. As fundamental volatility increases around the world, especially
in EM, the cost/benefit of exporting capacity is slowly eroding as time and quality begin to
take precedent over price and quantity. Therefore we believe it is only a matter of time before
US companies will need to invest to facilitate growth. What changes the behavior? We
believe managements will be reticent to invoke change until they absolutely have to or until
incentives in the form of cash repatriation and/or corporate tax reform takes shapean event
that is unlikely to occur for at least a few more years. In addition, we believe investors should
not discount the increased odds of a more friendly energy platform in America the next few
years, which would literally fuel on-shoring and job growth, and thereby increase the
prospects for North America to become a low-cost efficient producer of goods and services.
Exhibit 19: Emerging Market Growth Is Slowing While the US Is Becoming Cost Competitive Again
China, GDP Growth
15
14
13
12
11
10
9
8
7
6
5
OECD Competitiveness Indicator

Normalized as of 12/31/94
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
-0.2
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
estimates
US
China
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
Source: BMO Capital Markets Investment Strategy Group, Bloomberg, IMF, OECD.
Demand for US equities. Prospects for higher interest rates, lower commodity costs and
increased fundamental volatility in EM and Europe likely increases the demand for US
equities.
BMO view: We continue to believe non-US investors have been reluctant buyers of US stocks
and have been in many ways "renting performance" until overall global growth, and
especially EM, recovers. Let's face it, investors have spent a lot of time learning about EM,
small cap, credit, and commodities the past 10-15 and do not want that work to go to waste.
In addition, a 30-year bull market in bonds has been tough to reverse. As such, anytime a
glimmer of hope shines, they seem to run back in droves. Case in point, the rally in 10-year
Treasuries in 2014 looks and feels like a blow-off top every day, while the rallying cries for a
European recovery in early 2014 fell very short. As such, we believe a multiyear period of
underperformance remains in the very early stages for those aforementioned asset classes,
with US stocks the most logical and fundamentally based landing spot.
A member of BMO
Financial Group
19
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Exhibit 20: Foreigners Remain Reluctant US Buyers, But Returns Have Lagged in Other Regions
Net Foreign Purchase of US Stocks
2014 Cumulative Price Return
$ millions
15%
250000
S&P 500
200000
MSCI Emerging Markets
10%
MSCI Europe
150000
5%
100000
50000
0%
0
-5%
-50000
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
-100000
-10%
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Source: BMO Capital Markets Investment Strategy Group, Federal Reserve.
A member of BMO
Financial Group
20
December 1, 2014
2015
Market Outlook
BMO Capital Markets
US Sector Recommendations
For some time now we have been sharing our view that US stocks will set the fundamental
and performance pace for equities around the world for at least the next several years. As
such, we continue to favor Financials, Industrials, and Information Technology within
portfolios. Each sector contains fundamental attributes and themes that will benefit from the
stronger-than-expected US economic recovery that we believe will occur over the next
several quarters. By contrast, we prefer to avoid areas of the market that are overly exposed to
emerging markets since fiscal and monetary uncertainty remains quite high while economic
growth in these nations has begun to cool. As such we recommend that investors lighten up
on Energy and Materials.
Overweight:
Financials; Recommended Weight of 21.5% vs. Index Weight of 16.3%
The most feared sector globally, despite massive fundamental structural change since
2008as most companies and investors alike continue to treat sector as if it were
indeed still 2008-2009, in our view.
For instance, consensus believes that regulations will only worsen from here,
debilitating the sector into utility-like fashion.
Therefore, most of our clients around the world remain underweight the sector, a
primary reason we believe so many portfolio managers are underperforming.
We continue to favor regional banks for burgeoning commercial loan business
(increasing capex, on-shoring), with money centers, select insurance, asset managers,
and brokers benefitting from re-creation of the wealth theme for the next several
years.
Exhibit 21: Financials Have the Highest Correlation to the Strengthening US Economy; and Fund Managers Remain Cautious
on the Sector
Price Returns Explained By Business Cycle
R2 from linear regression between sector prices and leading indicators

beginning 1990
78%
61%
76%
1.0%
76%
65%
57%
0.5%
0.0%
58%
51%
49%
48%
-0.5%
-1.0%
17%
SPX
UTIL
TELS
MATR
INFT
INDU
HLTH
FINL
ENRS
CONS
-1.5%
COND
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Financials Weight in Top 200 US Equity Mutual Funds

vs. S&P 500 Index Weight
-2.0%
3/09
12/09
9/10
6/11
3/12
12/12
9/13
6/14
Source: BMO Capital Markets Investment Strategy Group, FactSet, Lionshares, Bloomberg.
A member of BMO
Financial Group
21
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Industrials; Recommended Weight of 12.5% vs. Index Weight of 10.5%
Industrials remain the most eclectic and most misunderstood sector in the US.
Most investors remain fixated on those names within the sector that rely on
international growth (prior cycle leadership).
However, many of these same names have very strong North American
operations and growth, fundamentals that we believe will more than compensate
for a potential slowdown in Europe and Emerging Markets.
We continue to favor railroads, aerospace and defense, select conglomerates, tool
companies, waste management, and select machinery.
Exhibit 22: Domestically Focused Industrials Appear Most Attractive

Industry
Domestic Focused*
Foreign Focused*
Industrials
Sector Weight
42.4%
57.6%
NA
2015E PE
16.9
16.1
16.4
2015E EPS Gr.

11.3
9.3
10.1
PEG 2015
1.5
1.7
1.6
NA
19.9
13.7
1.5
S&P 500
Source: BMO Capital Markets Investment Strategy Group, FactSet, IBES.

*Domestic/Foreign Companies are defined as those with lower/higher 5-year average foreign sales compared to the
sector level of 38%.
Exhibit 23: Stable Relative Price Performance Suggest Industrials Requires Active Stock
Selection
Industrials vs. S&P 500 - Relative Price Index
0.27
Dotted lines represent +/- 1 std. dev.
0.25
0.22
0.20
0.17
1990
1993
1996
1999
2002
2005
2008
2011
2014
A member of BMO
Financial Group
22
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Technology; Recommended Weight of 22% vs. Index Weight of 19.9%
In our view, Technology is the poster child for structural fundamental reform in
corporate America the past decade.
Increasingly stable earnings, massive balance sheets and steady cash flow, not to
mention dividend growth in many of the larger legacy Technology leaders.
Granted, the sector is not the go-go grower of the 1990s. However, we believe
that is a positive thing as the sector rebuilds credibility through continued
innovation and stability of operating results.
We continue to favor bricks and mortar Tech relative to social networking stocks.
After all, these are the areas that literally make the social network run. As such, we
prefer software, peripherals, and select hardware and service companies.
Exhibit 24: Technology Continues to Offer GARP Characteristics

Technology Valuation & Earnings Growth
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
1994
1997
2000
2003
2006
2009
Valuation Composite vs. S&P 500
2012
Earnings Growth Composite
Source: BMO Capital Markets Investment Strategy Group, IBES.
Exhibit 25: Strong Demand Is Also Providing Technology Tailwinds

Technology Performance & ISM New Orders
80%
70
40%
50
0%
30
-40%
10
-80%
1991
1994
1997
2000
2003
2006
2009
Information Technology Performance (%y/y)
2012
ISM: New Orders Index
Source: BMO Capital Markets Investment Strategy Group, ISM.
A member of BMO
Financial Group
23
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Market Weight:
Consumer Discretionary; Recommended Weight of 11% vs. Index Weight of 11.8%
Weakness beginning to unwind after several months of steady underperformance.

To be clear, we are not advocating an Overweight stance given lofty sector
valuations and increasing structural headwindsspecially for traditional retail.
As such, we believe the consensus belief to own the sector again due to falling
commodity costs is too simplistic.
We prefer very select high- and low-end retail, media and select restaurants.
Consumer Staples; Recommended Weight of 9% vs. Index Weight of 9.8%
Staples remain a classic neutral sector, with valuations near historical norms and
earnings remaining the US markets most stable.
We favor select beverages, household products, and hypermarkets.
Exhibit 26: Analyst Pessimism Is Receding, but Consumer Discretionary Remains Relatively Expensive; Strong NonDiscretionary Spending Continues to Support Consumer Staples
Consumer Staples Performance vs Non-Discretionary
Spending
Consumer Discretionary Valuation Composite

1.5
8%
1.0
30%
6%
0.5
0.0
20%
4%
10%
2%
0%
-0.5
0%
-1.0
-2%
-10%
-20%
-30%
2000
-1.5
1990
1993
1996
1999
2002
2005
2008
2011
40%
2003
2006
2009
2012
Retail Sales: Food & Beverage/Pharma Stores (%y/y)
2014
Consumer Staples Performance (%y/y)
Source: BMO Capital Markets Investment Strategy Group, FactSet, IBES, Census Bureau.
A member of BMO
Financial Group
24
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Health Care; Recommended Weight of 13% vs. Index Weight of 14.2%
Recent outperformance has been dominated by very select areasespecially within

biotech and pharma.
As such, many of these areas are extended near-term but provide stronger
longer-term fundamentals in our view.
Therefore, we would continue to be very select within both biotech and pharma,
while avoiding most devices at current levels.
Overall sector valuations are no longer cheap, with 2014 outperformance likely
spelling more neutral trends for the next several months.
We also prefer select instrument and managed care companies.
Telecom Services; Recommended Weight of 2.5% vs. Index Weight of 2.4%
Upgrading from Underweight stance.

Earnings and dividend growth are much improvedespecially relative to other
higher yield brethren like Utilities.
We prefer traditional telecom service companies.
Exhibit 27: Health Care Has Strong Earnings Growth but Valuations Are at Cycle Highs; Telecommunications Has Been
Upgraded to Market Perform on Improved Dividend Growth and Earnings Outlook
Health Care Valuation & Earnings Growth
2.5
Telecommunications Dividend Growth vs Relative

Performance
1.50
0.3
2.0
1.00
0.3
0.50
0.2
0.5
0.1
0.0
-1.0
(0.50) 0.1
0.0
(1.00) -0.1
-1.5
(1.50)
1.5
1.0
-0.5
1994
1997
2000
2003
2006
Valuation Composite
2009
0.14
0.2
0.11
-0.1
2012
Earnings Growth Composite
0.07
2003
2006
2009
2012
DPS Growth (adv. 4Q)
Telecommunications vs. S&P 500
2015
A member of BMO
Financial Group
25
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Underweight:
Energy; Recommended Weight of 6.5% vs. Index Weight of 8.7%
Downgrading to Underweight from Market Weight stance.
Perfect storm of slowing EM growth, expanding North American supply and lower
crude prices equate to a perfect storm against the sector.
A behavior change must occur with companies and analysts alike as sector
transitions operationally and psychologically from demand driven to supply.
We prefer very specific services, integrated and E&P companies.
Exhibit 28: Sharp Drop in Revisions Suggest Potential Negative EPS Growth in 2015; and Rising Domestic Oil Production Will
Likely Keep Downward Pressure on Oil Prices
Energy EPS Growth & Revisions
60%
2.00 10000
50%
40%
30%
20%
10%
1.00
8000
6000
Domestic Oil Production vs WTI Spot Price
150
100
50
(1.00) 4000
0%
-10%
2011
2012
2013
(2.00) 2000
1999
2014
0
2001
2003
2005
2007
2009
2011
2013
US Crude Oil Production (000 bbl/d)

WTI Spot (EOP, $Barrel)
NTM EPS Growth

Revisions Composite
Source: BMO Capital Markets Investment Strategy Group, FactSet, IBES, Haver, EIA, CME.
Materials; Recommended Weight of 1% vs. Index Weight of 3.3%

Over capacity and decelerating global growth remain stumbling blocks.
Avoid precious metals; base metals improving; we prefer chemicals and specialty
companies.
Exhibit 29: Weaker Commodity Prices and Slow Global Growth Will Continue to Weigh on the Sector
Materials Sales Growth vs. Commodity Prices
40%
40%
20%
20%
0%
0%
GDP Growth - Emerging Markets
10
8
6
4
-20%
-20%
-40%
-40%
2
2000
2003
2006
2009
Sales Growth
2012
2015
0
2002
CRB Spot (y/y, adv. 2Q)
2004
2006
2008
2010
2012
2014
2016
2018
Source: BMO Capital Markets Investment Strategy Group, FactSet, IBES, Haver, CRB, IMF.
A member of BMO
Financial Group
26
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Utilities; Recommended Weight of 1% vs. Index Weight of 3.1%
Utilities remain one of the most expensive assets in the world.

Polar vortex fear trade back into high yield in 2014 was a likely head fake.
Realities of higher interest rates is not a positive.
We prefer very select traditional electric utilities with above sector dividend and
earnings growth.
Exhibit 30: Utilities Remain Very Expensive; and Will Likely Be Challenged in a Rising Rate Environment
Utilities Valuation Composite
Utilities Relative Performance vs Rates
2.0
0.12
2.1
1.5
2.3
0.12
1.0
2.5
0.5
0.11
0.0
-0.5
2.7
2.9
0.11
-1.0
3.1
0.10
12/13
-1.5
-2.0
1990
1993
1996
1999
2002
2005
2008
2011
2014
2/14
4/14
6/14
Utilities vs. S&P 500
8/14
10/14
10-year Treasury Yield (inverted rhs)
Source: BMO Capital Markets Investment Strategy Group, FactSet, IBES, Bloomberg.
A member of BMO
Financial Group
27
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Canada: Continued Underperformance, but Increasing Correlation to US

We believe the S&P/TSX Index will achieve a year-end 2015 price target of 15,600 on
earnings of $940. This will mark another year of positive returns for Canadian stocks;
however the S&P/TSX will likely underperform the US for the fifth consecutive year, as the
US economy continues to outpace global growth. Additionally, although we believe that
sentiment around EM and Europe will continue to drive broad swings above and below our
target, ultimately Canada will become increasingly correlated with the US. As such, despite
the potential for a year-over-year decline in resource prices in 2015, we expect Canada will
post another positive year driven by US strength.
Exhibit 31: Resurging US Manufacturing to Be an Increasing Net Positive for Canadian Equities. Operating Efficiency
Continues to Improve, Supporting a Strong Dividend Yield
S&P/TSX vs. Global PMI & US PMI
65
60
40% 4.0%
55
20%
50
0%
45
-20%
40
-40%
10y Correlation: Global PMI: 81%

US ISM: 76%
35
1999
2001
2003
2005
US ISM
2007
2009
2011
2.0
1.0
3.0%
0.0
2.0%
-60%
Global PMI
S&P/TSX Dividend Yield vs Operating Efficiency
60% 5.0%
-1.0
1.0%
0.0%
-2.0
1999
2013
2001
S&P/TSX Price Index (%y/y)
2003
2005
2007
Dividend Yield
2009
2011
2013
Efficiency Composite
Source: BMO Capital Markets Investment Strategy Group, FactSet, IBES, Bloomberg, Markit, ISM, S&P.
Exhibit 32: Oil Prices Remain a Key Obstacle to Any Sustained Outperformance; TSX Volatility Is Increasing Relative to US
S&P/TSX vs. WTI Spot Price
18000
130 1.2
16000
14000
110 1.1
12000
90
10000
70
8000
S&P/TSX vs S&P 500 Relative 6m Trailing Volatility
1.0
0.9
50
6000
4000
30
2000
10
S&P/TSX Price Index
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
0
WTI Spot Price (AVG, $/Barrel)
0.8
0.7
0.6
2010
2010
2011
2011
2012
2012
2013
2013
2014
2014
Source: BMO Capital Markets Investment Strategy Group, FactSet, IBES, Haver, S&P, IEA.
A member of BMO
Financial Group
28
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Two out of Canadian Big 3 Sectors Face Fundamental and Macro Hurdles
While Financials remain our favored sector, we continue to believe most Canadian
centric investors remain apologetic about owning the sector.
Pristine balance sheets, steady earnings, and consistent dividend growth, not to
mention historically better behaved relative to their neighbors to the south will
likely reward the sector with higher ROEs and multiples for years to come.
However, the story is not as positive for Materials and Energy.

The super cycle in commodities is clearly over.
EM is now dealing with over capacity and decelerating growth, a scenario that
may take up to five years to dissipate.
While oil prices have declined, the sectors relative weight within the index has
not corrected as one would expect.
Furthermore, although both Energy and Materials stocks have suffered sharp
price corrections, longer-term earnings expectations are not reflective of the
changing global and intra-sector dynamic, in our view.
Exhibit 33: S&P/TSX Sector Weights

Industry
Energy
Materials
Industrials
Consumer Discretionary
Consumer Staples
Health Care
Financials
Information Technology
Telecommunications Services
Utilities
Average (1956present)
12.7%
25.6%
8.2%
5.8%
6.2%
0.7%
20.4%
3.1%
6.9%
4.3%
Peak
32.8%
45.3%
13.4%
11.4%
12.5%
3.7%
35.6%
42.2%
16.8%
7.0%
Trough
4.2%
7.3%
5.0%
2.8%
1.4%
0.0%
10.3%
0.1%
3.9%
1.3%
Current
22.9%
10.7%
8.8%
6.1%
3.3%
3.4%
35.8%
2.0%
4.8%
2.2%
Source: BMO Capital Markets Investment Strategy Group, IHS Global Insight.
A member of BMO
Financial Group
29
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Exhibit 34: Energys Index Weight Remains High

S&P/TSX Energy Sector Weight
35%
30%
25%
20%
15%
10%
5%
0%
1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013
Source: BMO Capital Markets Investment Strategy Group, IHS Global Insight.
Exhibit 35: S&P/TSX EPS Sector Weights: Falling Energy Earnings Will Require Other Sectors to Pick Up the Slack
S&P/TSX EPS Weight: Current
TELS, 2%
UTIL, 4%
MATR,
10%
INFT, 5%
S&P/TSX EPS Weight: 1998-99 Average
COND,
13%
TELS, 6%
CONS, 6%
UTIL,
9%
COND, 22%
MATR, 8%
INDU, 11%
INFT, 3%
INDU, 3%
HLTH, 1%
ENRS, 16%
HLTH, 2%
CONS, 10%
FINL, 29%
FINL, 31%
ENRS, 9%
A member of BMO
Financial Group
30
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Exhibit 36: Current Energy Sector Earnings Revisions Are Tracking the 2008 Recession; However, Price Performance Is Not
Energy Revision Composite Cycles (by Months)
2.0
Energy Sector Performance during Revision Cycles
1.2
1.0
1.0
0.0
0.8
-1.0
-2.0
0.6
-3.0
-4.0
0.4
1
Current
Average Cycle
10
08 Recession
3
Current
Average Cycle
10
08 Recession
A member of BMO
Financial Group
31
December 1, 2014
2015
Market Outlook
BMO Capital Markets
S&P/TSX Targets: 2015 Year-End Price Target of 15,600 and EPS Target of $940
Although valuations are above historical norms, consistent dividend growth and our
previously lowered risk premium assumption are supportive of continued positive
returns in 2015.
Of our models, our Macroeconomic models are flagging the weakest earnings growth
and potential price performance heading into 2015, driven by weak global growth
and commodity prices.
Negative earnings revisions heading into 2015 will likely keep earnings growth
contained to the mid-single digits, more than two percentage points below US EPS
growth for the second consecutive year.
Price multiples to remain relatively flat at roughly 16.6x for 2015, a moderate
discount to the US.
Exhibit 37: 2015 S&P/TSX Composite Targets

Price Target
Model
Dividend Discount Model
Fair Value Price-to-Earnings Model
EPS Revision Model
Category
Fundamental
Valuation
Mean Reversion
Macro
2015E
15625
15900
15075
14925
Earnings Per Share Target

Model
Mean Consensus Regression Model
Bottom Up Mean Consensus Expectation
Normalized EPS
7.6%
14500
15600
Expected EPS Growth*

Prior Year S&P/TSX Comp. EPS*
EPS Target
Expected Return*
Prior Year End S&P/TSX Comp. Close*
Price Target
Category
Macro
Macro
Fundamental
Mean Reversion
2015E
847.50
950.75
952.25
989.25
5.6%
890
940
Implied P/E:
16.6x
Source: BMO Investment Strategy Group. *Based on our 2014 target.
Exhibit 38: S&P/TSX Valuations Have Improved, However Earnings Expectations Remain Lofty Suggesting the Market May
Struggle as Analysts Re-rate Earnings; Additionally, Soft Commodity Prices Suggests a Discount to the TSX Multiple
S&P/TSX Earnings Growth and Valuation
50%
20
40%
S&P/TSX vs. S&P 500 Multiples & Energy Price

120%
18 6
4
16
2
30%
20%
60%
0%
14 0
-2
12
-4
10%
0%
-10%
-20%
1999
2001
2003
2005
2007
2009
NTM EPS Gr.
2011
2013
2015
10 -6
-8
8
12/1
-60%
-120%
12/1
12/1
12/1
12/1
TSX vs SPX LTM PE
NTM Median PE
12/1
12/1
12/1
TSX vs SPX NTM PE
WTI (y/y)
A member of BMO
Financial Group
32
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Canadian Sector Recommendations

Overweight:
Financials; Recommended Weight of 39% vs. Index Weight of 35.8%
Financials remain among the most stable earners in Canada, while also offering
attractive yields and dividend growth. Additionally lower leverage and higher
barriers to entry will likely warrant higher multiples for Banksespecially relative to
their US counterparts.
Furthermore, we believe insurance and banks can be owned together given the
increased asset management exposure within Canadian insurance companies, which
have helped diversify their revenue growth while aiding to dilute potential risk of
higher interest rates.
Exhibit 39: Financials Have Returned to Peak Operating Efficiency, Growth Expectations Have Improved, and Dividend
Growth Has Surged
Financials Earnings Growth & Operating Efficiency
30%
Financials Dividend Growth
35%
2.0
30%
25%
25%
1.0
20%
20%
15%
15%
-
10%
10%
5%
5%
(1.0)
0%
0%
-5%
-5%
-10%
(2.0)
1999
2001
2003
2005
2007
2009
NTM EPS Gr.
2011
2013
Efficiency Composite
-10%
-15%
-20%
2008
2009
2010
2011
2012
2013
2014
A member of BMO
Financial Group
33
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Industrials; Recommended Weight of 11% vs. Index Weight of 8.8%
Industrials have seen one of the strongest improvements in underlying fundamentals

and will likely continue to benefit the most from the strengthening US economy.
We continue to favor the railroads and select manufacturers and waste management.
Exhibit 40: Industrials Earnings Growth Continues to Be Driven by the US, and Freight Traffic Is Hitting Record Highs
Industrials Earnings Growth vs. Industrial Production
50%
Intermodal Freight (Seasonally Adjusted)
20% 200000
300000
15%
40%
10%
30%
5%
20%
160000
240000
120000
180000
0%
10%
-5%
0%
-10%
-10%
-15%
-20%
-20%
1999
2001
2003
2005
2007
NTM EPS Gr.
2009
2011
2013
80000
120000
2000
2002
2004
US Industrial Production (%y/y)
2006
2008
Canada
2010
2012
US
2014
Source: BMO Capital Markets Investment Strategy Group, FactSet, IBES, FRB, Haver, Bloomberg, Statistics Canada, AAR.
Telecommunications; Recommended Weight of 6% vs. Index Weight of 4.8%
We are upgrading Telecom to Outperform based on a clear trough in actual earnings

growth and expectations, as the threat of new entrants has diminished and pricing
power has been restored. Additionally, it has been an underperforming sector that
now offers good relative value in our view.
We favor the traditional integrated telecom companies.
Exhibit 41: Telecom Earnings Growth Is Expected to Rebound in 2015, and Valuations are Relatively Attractive; Additionally,
Pricing Power Remains Strong
Telecommunications Earnings Growth
CPI: Communications (%y/y)
50%
10%
40%
8%
30%
6%
4%
20%
2%
10%
0%
0%
-2%
-10%
-4%
-20%
2006
2008
2010
2012
LTM EPS Gr.
2014
NTM EPS Gr. (adv 12M)
-6%
-8%
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
Source: BMO Capital Markets Investment Strategy Group, FactSet, IBES, Haver Analytics, Statistics Canada.
A member of BMO
Financial Group
34
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Market Weight:
Consumer Discretionary; Recommended Weight of 6% vs. Index Weight of 6.1%
We are upgrading Consumer Discretionary to Market Perform on an improved

earnings outlook; however, valuations remain extended.
We prefer select retailer and media.
Consumer Staples; Recommended Weight of 4% vs. Index Weight of 3.3%

Health Care; Recommended Weight of 3% vs. Index Weight of 3.4%
Information Technology; Recommended Weight of 2% vs. Index Weight of 2.0%
Staples and Health Care remain stable long-term holds, while Technology is growing
but lacks meaningful company representation within the index.
We prefer select food retailing in Staples and pharma within Health Care.
Exhibit 42: Consumer Discretionary Earnings Outlook has Improved, However Valuations Are at Cycle Peaks; Consumer
Staples Earnings Growth Continues to Be Supported by Good Relative Pricing Power, Despite Increased Competition Threat
Consumer Discretionary Earnings Growth vs. Valuation
50%
23
40%
21
19
30%
17
20%
15
10%
13
11
0%
-10%
-20%
5
1999
2001
2003
2005
2007
2009
NTM EPS Gr.
2011
Consumer Staples Earnings Growth vs. Food Inflation

Margins
1.2
40%
0.6
20%
0%
0.0
-20%
-0.6
-40%
-60%
-1.2
2000
2013
NTM PE
60%
2002
2004
2006
Earnings Composite
2008
2010
2012
2014
Consumer Food Price Inflation less Argicultral Price Inflation
Source: BMO Capital Markets Investment Strategy Group, FactSet, IBES, Haver Analytics, Statistics Canada, Bank of Canada.
Underweight:
Energy; Recommended Weight of 20% vs. Index Weight of 22.9%
A member of BMO
Financial Group
Perfect storm of slowing EM growth, expanding North American supply and lower
crude prices equate to a perfect storm against the sector.
Even more than the US, given the importance of the sector within the Canadian
market, a behavior change must occur with companies and analysts alike as sector
transitions operationally and psychologically from demand to supply driven.
We would bottom-fish select integrated, natural gas, pipes, and very select services
once earnings expectations become more realistic.
35
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Exhibit 43: Although the Energy Sectors Calendar Year 2015 EPS Has Come Down, WTI
Suggests More to Come
Energy CY 2015 Earnings vs WTI Prices
210.0
110
205.0
105
200.0
100
195.0
95
190.0
90
185.0
85
180.0
80
175.0
75
170.0
12/13
70
1/14
2/14
3/14
4/14
5/14
CY 2015 EPS
6/14
7/14
8/14
9/14
10/14
11/14
12/14
1/15
WTI Spot, Cushing ($/Barrel)
Source: BMO Capital Markets Investment Strategy Group, FactSet, IBES, Haver Analytics, IEA.
Materials; Recommended Weight of 8% vs. Index Weight of 10.7%
Although valuations may look attractive, we are downgrading Materials due to

increased commodity price volatility and global growth concerns. More importantly,
operating and profitability metrics remain weak, suggesting solvency risk in the
sector on further commodity price weakness.
We favor forest and paper products over precious metals, with base metals showing
slow improvement.
Exhibit 44: Material Sectors Overall Fundamentals Remain Weak and Commodity Prices Will
Likely Remain Soft
Materials Fundamentals vs Commodity Prices
1.0
50%
40%
0.6
30%
20%
0.2
10%
0%
-0.2
-10%
-20%
-0.6
-30%
-40%
-1.0
-50%
2004
2006
2008
Fundamental Composite
2010
2012
2014
BoC: Metals & Minerals Commodity Price Index (CAD, y/y)
Source: BMO Capital Markets Investment Strategy Group, FactSet, IBES, Haver Analytics, Bank of Canada.
A member of BMO
Financial Group
36
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Utilities; Recommended Weight of 1% vs. Index Weight of 2.2%
Valuations remain relatively high in the Utilities sector, while earnings growth and
profitability are weak.
We prefer very select traditional electric utilities with above sector dividend and
earnings growth.
Exhibit 45: Utilities Continue to Show Poor Profitability and Earnings Growth
Utilities Earnings Growth & ROE
1.5
15%
14%
1.0
13%
12%
11%
0.5
10%
9%
0.0
8%
7%
-0.5
6%
5%
-1.0
2003
2005
2007
2009
2011
Earnings Composite
2013
ROE
A member of BMO
Financial Group
37
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Implementation Strategies
Large-cap over small-cap. We believe large-cap has entered a multi-year period of
outperformance relative to small-capespecially in US stocks. For instance, small-cap was

part of the prior cycle leadership when credit, commodities, and low quality led the way.
However, our work continues to suggest that leadership is rarely similar from cycle to cycle.
Furthermore, we believe valuation, earnings stability, and especially balance sheet prowess
and dividend growth place large-cap companies at a significant advantage to small-caps,
especially when it comes to private client re-engagement, which has yet to resurface.
Exhibit 46: Small vs. Large Runs in Long Cycles

Russell 2000 vs. Russell 1000
1.8
1.6
1.4
1.2
1
0.8
1979
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2007
2008
2009
2010
2011
2012
2013
2014
0.6
Source: BMO Capital Markets Investment Strategy Group, Haver, Russell.
Value over growth. While growth has displayed short-term periods of outperformance over
the past few years, we continue to believe value disciplines are best positioned over the next
several months. For one thing, our factor work shows that traditional fundamental and value
metrics such as valuation and operating performance continue to display steady performance.
In addition, we believe value strategies provide increasingly stable returns, especially during
periods of higher volatility, which we believe will likely resurface given the strong string of
positive returns in US stocks and the likelihood of changing macro dynamics.
Exhibit 47: Value Has Been a Better and More Consistent Performer Longer-Term
Annualized Total Return By Style
Standard Deviation of Annualized Total Return By Style
data beginning 1980
11.9%
12.0%
11.8%
data beginning 1980
22.0%
20.3%
20.0%
11.6%
18.0%
11.4%
11.2%
15.1%
16.0%
11.1%
14.0%
11.0%
12.0%
10.8%
10.6%
10.0%
Large-cap Growth
Large-cap Value
Large-cap Growth
Large-cap Value
Source: BMO Capital Markets Investment Strategy Group, Bloomberg, Dow Jones Indices.
A member of BMO
Financial Group
38
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Quality over volatile growth. Akin to our preference for value, we continue to favor quality
relative to volatile growth. For instance, as investors slowly accept the notion of owning
stocks again, we believe they will seek quality and substance compared to uncertainty and
flash. In addition, our work shows the return structures of higher quality growth stocks
significantly outperform generic growth stocks.
Exhibit 48: Quality of Growth Is More Important Than Just High Growth Rates
Cumulative Total Return of Growth Strategies
2000%
1500%
Quality Growth Theme Screen

DJ Large-cap Growth Index
1000%
500%
1992
1992
1993
1994
1995
1995
1996
1997
1998
1998
1999
2000
2001
2001
2002
2003
2004
2004
2005
2006
2007
2007
2008
2009
2010
2010
2011
2012
2013
2013
2014
0%
-500%
Source: BMO Capital Markets Investment Strategy Group, FactSet, IBES, CompuStat.
Dividends still matter. Despite our concern regarding certain yield-based strategies given our
interest rate expectations, dividends remain an important part of our longer-term investment
outlook. However, we believe investors should focus more on dividend growth rather than
yield when searching for opportunities. We have found that dividend-growth strategies
perform much better than yield strategies when interest rates are rising. In addition, valuation
and yield differentials also make a compelling case for dividend growth, in our view.
Furthermore, dividend-growth strategies tend to be more cyclically exposed, which is an
added benefit should economic conditions continue to improve as we expect in the coming
months.
Exhibit 49: Dividends Deliver a Meaningful Portion of Total Returns Longer-Term

Distribution of S&P 500 Annualized Returns Since 1948
12%
11.3%
10%
7.4%
8%
6%
3.9%
4%
2%
0%
Total Return
Price Return
Dividend Return
Source: BMO Capital Markets Investment Strategy Group, Haver, Russell.
A member of BMO
Financial Group
39
December 1, 2014
2015
Market Outlook
BMO Capital Markets
US Large-Cap Disciplined Value

Screen Methodology
To implement our disciplined value strategy, we screen the S&P 500 each January, April,
July, and October based on the following parameters:
No EPS losses in the past five years;
Debt to common equity less than 1x;
Positive expected EPS growth for the next two years; and
P/B and forward P/E values less than that of the S&P 500.
USLarge-Cap Disciplined Value Theme Screen Stocks

Ticker
ADM
AET
AIZ
BMS
CAM
CI
COF
CSCO
DGX
DOW
EMC
ETN
GLW
HP
IVZ
JEC
JNPR
KSS
LRCX
MPC
NDAQ
NOV
PCG
PFG
PGR
PVH
PWR
SWK
T
TMO
UNM
WDC
WHR
WLP
XRX
Company
Archer Daniels Midland Co.
Aetna, Inc.
Assurant, Inc.
Bemis Co., Inc.
Cameron International Corp.
Cigna Corp.
Capital One Financial Corp.
Cisco Systems, Inc.
Quest Diagnostics, Inc.
The Dow Chemical Co.
EMC Corp.
Eaton Corp. Plc
Corning, Inc.
Helmerich & Payne, Inc.
Invesco Ltd.
Jacobs Engineering Group, Inc.
Juniper Networks, Inc.
Kohl's Corp.
Lam Research Corp.
Marathon Petroleum Corp.
The NASDAQ OMX Group, Inc.
National Oilwell Varco, Inc.
PG&E Corp.
The Principal Financial Group, Inc.
Progressive Corp.
PVH Corp.
Quanta Services, Inc.
Stanley Black & Decker, Inc.
AT&T, Inc.
Thermo Fisher Scientific, Inc.
Unum Group
Western Digital Corp.
Whirlpool Corp.
WellPoint, Inc.
Xerox Corp.
Price
$53.18
$86.91
$67.59
$39.74
$56.82
$102.01
$82.75
$27.43
$64.43
$51.76
$30.04
$69.21
$21.07
$77.73
$40.46
$47.47
$22.20
$58.67
$82.19
$95.67
$44.83
$71.29
$49.94
$54.18
$27.24
$124.49
$33.51
$94.77
$35.13
$128.66
$33.65
$103.67
$183.54
$126.90
$13.89
BMO Rating*
OP
OP
NR
Mkt
NR
OP
NR
OP
NR
NR
OP
NR
NR
NR
NR
NR
Mkt
Mkt
NR
NR
OP
NR
Mkt
NR
NR
NR
NR
NR
Mkt
NR
NR
OP
NR
Mkt
Mkt
Months In Screen
6
3
30
3
NEW
NEW
3
3
6
NEW
NEW
9
6
3
15
NEW
6
6
NEW
3
18
6
NEW
18
3
3
NEW
9
15
NEW
21
NEW
39
3
18
Source: BMO Capital Markets Investment Strategy. Prices as of 11/26/2014. Screened constituents as of 10/31/2014. *Rating Key,
according to BMO Capital Markets Equity Research: OP: Outperform, Mkt: Market Perform, Und: Underperform, NR: Not rated by BMO
Capital Markets. Some stocks in the table above may be covered by our Canadian affiliate BMO Nesbitt Burns Inc. Click here for
disclosures on those stocks: http://researchglobal.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspx
A member of BMO
Financial Group
40
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Exhibit 50: US Large-Cap Disciplined Value Total Return Snapshot

20%
17.8%
US Large-Cap Disciplined Value
18%
17.3%
S&P 500
16%
13.3%
14%
11.0%
12%
10%
8.2%
8%
6.6%
5.0%
6%
4%
2%
9.9%
9.5%
2.4%
2.9%
1.2%
0%
1 Month
3 Months
6 Months
Year-to-Date
12 Months
CAGR Since 1990
US Quality Growth
Screen Methodology
To implement our quality growth strategy, we screen the S&P 500 each January, April, July,
and October based on the following parameters:
LTM earnings accrual ratio less than that of the S&P 500 for nonfinancial stocks;
Five-year EPS stability lower than the S&P 500 for financial stocks;
FY2 expected earnings growth greater than FY1 expected earnings growth; and
FY1 and FY2 expected earnings growth greater than that of the S&P 500.
US Quality Growth Theme Screen Stocks

Ticker
AGN
ALLE
AMG
AVY
CAH
CAM
CCL
DG
DLTR
DOW
EA
ETN
FFIV
FIS
FLIR
JNPR
M
MCO
MDLZ
MPC
A member of BMO
Financial Group
Company
Allergan, Inc.
Allegion Plc
Affiliated Managers Group, Inc.
Avery Dennison Corp.
Cardinal Health, Inc.
Cameron International Corp.
Carnival Corp.
Dollar General Corp.
Dollar Tree, Inc.
The Dow Chemical Co.
Electronic Arts, Inc.
Eaton Corp. Plc
F5 Networks, Inc.
Fidelity National Information Services
FLIR Systems, Inc.
Juniper Networks, Inc.
Macy's, Inc.
Moody's Corp.
Mondelez International, Inc.
Marathon Petroleum Corp.
41
Price
$214.00
$53.06
$203.17
$49.19
$81.50
$56.82
$42.12
$65.91
$67.34
$51.76
$43.68
$69.21
$129.09
$60.76
$31.78
$22.20
$63.53
$100.17
$39.00
$95.67
BMO Rating*
OP
NR
NR
NR
NR
NR
NR
OP
Mkt
NR
OP
NR
OP
Mkt
NR
Mkt
OP
NR
Mkt
NR
Months In Screen
NEW
6
3
6
NEW
6
3
6
3
10
3
3
6
NEW
3
NEW
NEW
NEW
3
NEW
December 1, 2014
2015
Market Outlook
BMO Capital Markets
US Quality Growth Theme Screen Stocks

Ticker
NBR
NDAQ
NFX
NSC
NTRS
PNR
PPG
PXD
QEP
SHW
SWK
TRIP
WAG
Company
Nabors Industries Ltd.
The NASDAQ OMX Group, Inc.
Newfield Exploration Co.
Norfolk Southern Corp.
Northern Trust Corp.
Pentair Plc
PPG Industries, Inc.
Pioneer Natural Resources Co.
QEP Resources, Inc.
The Sherwin-Williams Co.
TripAdvisor, Inc.
Walgreen Co.
Price
$15.07
$44.83
$32.48
$117.20
$67.61
$68.03
$216.95
$160.81
$24.18
$240.60
$94.77
$72.77
$68.47
BMO Rating*
NR
OP
OP
OP
NR
NR
NR
Mkt
OP
NR
NR
NR
NR
Months In Screen
6
3
NEW
NEW
6
6
6
NEW
NEW
NEW
NEW
NEW
NEW
Exhibit 51: US Quality Growth Total Return Snapshot

20%
17.0% 17.3%
US Quality Growth
18%
S&P 500
16%
14.3%
14%
12%
10.4%
10%
7.3%
8%
2%
9.9%
8.2%
5.0%
6%
4%
11.0%
1.8%
2.4%
2.8%
0%
1 Month
3 Months
6 Months
Year-to-Date
12 Months
CAGR Since 1990
A member of BMO
Financial Group
42
December 1, 2014
2015
Market Outlook
BMO Capital Markets
US Dividend Growth
Screen Methodology
To implement our dividend growth strategy, we screen the S&P 500 each January, April,
July, and October based on the following parameters:
Dividend increases in each of the prior 10 years;
Dividend yield greater than the S&P 500;
Free cash flow yield greater than the dividend yield, except for Utilities;
Incremental EPS growth in each of the prior two completed years;
Incremental expected EPS growth in each of the next two years; and
Forward P/E multiple less than 20x.
US Dividend Growth Theme Screen Stocks

Ticker
ADI
ADM
BMS
D
EMR
GIS
GPC
IBM
JNJ
K
KMB
LLTC
LMT
MKC
MMM
NEE
NOC
NSC
NU
PEP
PG
PX
QCOM
RAI
SCG
SO
SWK
T
TXN
UTX
VZ
WAG
WEC
WM
XEL
XLNX
Company
Analog Devices, Inc.
Archer Daniels Midland Co.
Bemis Co., Inc.
Dominion Resources, Inc.
Emerson Electric Co.
General Mills, Inc.
Genuine Parts Co.
International Business Machines Corp.
Johnson & Johnson
Kellogg Co.
Kimberly-Clark Corp.
Linear Technology Corp.
Lockheed Martin Corp.
McCormick & Co., Inc.
3M Co.
NextEra Energy, Inc.
Northrop Grumman Corp.
Norfolk Southern Corp.
Northeast Utilities
PepsiCo, Inc.
Procter & Gamble Co.
Praxair, Inc.
QUALCOMM, Inc.
Reynolds American, Inc.
SCANA Corp.
The Southern Co.
AT&T, Inc.
Texas Instruments, Incorporated.
United Technologies Corp.
Verizon Communications, Inc.
Walgreen Co.
Wisconsin Energy Corp.
Waste Management, Inc.
Xcel Energy, Inc.
Xilinx, Inc.
Price
$54.56
$53.18
$39.74
$72.53
$65.38
$51.85
$101.84
$161.95
$107.21
$64.93
$114.16
$45.55
$189.15
$72.83
$158.31
$103.20
$141.45
$117.20
$49.64
$99.35
$88.88
$129.88
$72.26
$65.20
$56.52
$46.82
$94.77
$35.13
$54.33
$110.16
$50.04
$68.47
$48.48
$48.70
$33.50
$45.49
BMO Rating*
Mkt
OP
Mkt
Mkt
NR
OP
NR
Mkt
OP
Mkt
Mkt
Mkt
NR
NR
NR
OP
NR
OP
Mkt
OP
OP
NR
OP
NR
NR
Mkt
NR
Mkt
OP
NR
OP
NR
Mkt
NR
Mkt
Mkt
Months In Screen
NEW
6
18
6
42
15
6
3
NEW
6
42
NEW
9
NEW
6
21
3
6
6
6
12
NEW
3
NEW
18
6
NEW
9
NEW
3
9
NEW
66
6
18
3
A member of BMO
Financial Group
43
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Exhibit 52: US Dividend Growth Total Return Snapshot

20%
17.3%
US Dividend Growth
18%
15.9%
S&P 500
16%
13.9%
14%
10%
4%
5.0%
4.3%
9.9%
8.2%
7.6%
8%
6%
11.7%
11.0%
12%
5.9%
2.4%
2%
0%
1 Month
3 Months
6 Months
Year-to-Date
12 Months
CAGR Since 1990
Canadian Dividend Growth

Screen Methodology
To implement our dividend growth strategy, we screen the S&P/TSX each January, April,
July and October based on the following parameters:
Dividend yield greater than 0;
Free cash flow yield greater than dividend yield; and
Dividend payout ratio less than the S&P/TSX Composite.
Canadian Dividend Growth Theme Screen Stocks

Ticker
ASR
ATD.B
BEI.UT
BMO
CAE
CAR.UT
CCA
CCL.B
CF
CG
CNR
CP
CWB
DOL
EMP.A
FFH
FTT
GWO
HCG
IFC
ITP
LNR
A member of BMO
Financial Group
Company
Alacer Gold Corp.
Alimentation Couche-Tard, Inc.
Boardwalk REIT
Bank of Montreal
CAE, Inc.
Canadian Apartment Properties REIT
Cogeco Cable, Inc.
CCL Industries, Inc.
Canaccord Genuity Group, Inc.
Centerra Gold, Inc.
Canadian National Railway Co.
Canadian Pacific Railway Ltd.
Canadian Western Bank
Dollarama, Inc.
Empire Co. Ltd.
Fairfax Financial Holdings Ltd.
Finning International, Inc.
Great-West Lifeco, Inc.
Home Capital Group, Inc.
Intact Financial Corp.
Intertape Polymer Group, Inc.
Linamar Corp.
44
Price
$2.34
$39.45
$67.90
$83.59
$15.04
$25.51
$64.97
$120.25
$9.36
$5.90
$83.75
$235.79
$37.50
$53.81
$82.72
$579.99
$27.53
$33.49
$52.14
$79.78
$18.83
$65.82
BMO Rating*
Mkt
OP
Mkt
Mkt
OP
OP
Mkt
OP
NR
OP(S)
OP
OP
OP
Mkt
Mkt
Mkt
Mkt
Mkt
NR
OP
NR
OP
Months In Screen
1
23
1
5
13
29
13
71
1
5
83
13
5
65
4
1
16
1
29
1
5
16
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Canadian Dividend Growth Theme Screen Stocks

Ticker
MDA
MFC
MG
MIC
MRU
MX
NA
OTC
PJC.A
POW
PWF
RON
RY
SAP
SLF
SLW
STN
SU
TD
TGL
TIH
Company
MacDonald, Dettwiler & Associates Ltd.
Manulife Financial Corp.
Magna International, Inc.
Genworth MI Canada, Inc.
Metro, Inc.
Methanex Corp.
National Bank of Canada
Open Text Corp.
The Jean Coutu Group (PJC), Inc.
Power Corp. of Canada
Power Financial Corp.
RONA, Inc.
Royal Bank of Canada
Saputo, Inc.
Sun Life Financial, Inc.
Silver Wheaton Corp.
Stantec, Inc.
Suncor Energy, Inc.
The Toronto-Dominion Bank
TransGlobe Energy Corp.
Toromont Industries Ltd.
Price
$89.15
$22.54
$120.19
$41.82
$88.95
$64.12
$53.22
$65.98
$26.99
$32.04
$35.18
$13.79
$82.79
$32.23
$41.92
$24.06
$33.88
$39.07
$57.08
$4.04
$28.69
BMO Rating*
OP
OP
OP
OP
Mkt
OP
Mkt
Mkt
OP
OP
Mkt
Mkt
Mkt
OP
OP
OP
Mkt
OP
OP
NR
Mkt
Months In Screen
5
10
59
19
32
1
5
16
83
1
5
1
10
16
1
4
9
26
13
4
13
Capital Markets. **These stocks are covered by BMO Capital Markets, Corp.; all others are covered by BMO Nesbitt Burns, Inc. Click
here for disclosures on those stocks: http://researchglobal.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspx
Exhibit 53: Canadian Dividend Growth Total Return Snapshot

20%
18.2%
Canadian Dividend Growth
13.6%
S&P/TSX
15%
12.6%
13.9%
9.9%
10%
6.7%
6.3%
5%
1.1%
0.9%
0%
-0.4%
-5%
-2.1%
-4.0%
-10%
1 Month
3 Months
6 Months
Year-to-Date
12 Months
CAGR Since 1999
A member of BMO
Financial Group
45
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Canadian Consistent Growth

Screen Methodology
To implement our consistent growth strategy, we screen the S&P/TSX monthly based on the
following parameters:
Five-year earnings growth volatility lower than the S&P/TSX Composite,
Positive one-year change in return on common equity, and
FY1 EPS growth higher that the S&P/TSX Composite.
Canadian Consistent Growth Theme Screen Stocks

Ticker
ACQ
AGF.B
ATA
BAD
BNE
BNK
BXE
CCL.B
CIX
CLS
CNQ
CNR
CP
CSU
CWB
DOL
FRU
GIB.A
IFP
IMO
MFC
MG
OTC
PEY
POW
PPL**
PWF
RMP
RUS
STN
SU
T
TD
VRX
Company
AutoCanada, Inc.
AGF Management Ltd.
ATS Automation Tooling Systems, Inc.
Badger Daylighting Ltd.
Bonterra Energy Corp.
Bankers Petroleum Ltd.
Bellatrix Exploration Ltd.
CCL Industries, Inc.
CI Financial Corp.
Celestica, Inc.
Canadian Natural Resources Ltd.
Canadian National Railway Co.
Canadian Pacific Railway Ltd.
Constellation Software, Inc.
Canadian Western Bank
Dollarama, Inc.
Freehold Royalties Ltd.
CGI Group, Inc.
Interfor Corp.
Imperial Oil Ltd.
Magna International, Inc.
Open Text Corp.
Peyto Exploration & Development Corp.
Power Corp. of Canada
Pembina Pipeline Corp.
RMP Energy, Inc.
Russel Metals, Inc.
Stantec, Inc.
Suncor Energy, Inc.
TELUS Corp.
The Toronto-Dominion Bank
Valeant Pharmaceuticals Intl, Inc.
Price
$56.75
$10.19
$14.03
$31.30
$45.79
$4.09
$5.49
$120.25
$34.26
$12.36
$41.38
$83.75
$235.79
$328.34
$37.50
$53.81
$20.85
$41.25
$17.13
$54.98
$22.54
$120.19
$65.98
$34.99
$32.04
$42.13
$35.18
$5.89
$31.50
$33.88
$39.07
$42.66
$57.08
$162.67
BMO Rating*
NR
NR
NR
NR
OP
NR
OP
OP
NR
Mkt
OP
OP
OP
Mkt
OP
Mkt
Mkt
OP
NR
Mkt
OP
OP
Mkt
OP
OP
Mkt
Mkt
NR
Mkt
Mkt
OP
OP
OP
OP
Months In Screen
4
5
4
2
5
7
2
5
15
9
7
3
7
13
2
29
5
12
5
NEW
25
4
1
12
7
2
7
4
5
3
5
9
2
NEW
A member of BMO
Financial Group
46
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Exhibit 54: Canadian Consistent Growth Total Return Snapshot

20%
Canadian Consistent Growth
15%
14.9%
S&P/TSX
12.6%
9.9%
10%
6.3%
6.1%
5%
1.1%
2.0%
0%
-5%
-1.8% -2.1%
-5.1%
-4.0%
-4.2%
-10%
1 Month
3 Months
6 Months
Year-to-Date
12 Months
CAGR Since 1999
Canadian Disciplined Value

Screen Methodology
To implement our disciplined value strategy, we screen the S&P/TSX each January, April,
July and October based on the following parameters:
No EPS losses in the past five years;

Debt to common equity less than 1x;
Positive expected EPS growth for the next two years; and
P/B and forward P/E values less than that of the S&P/TSX Composite.
Canadian Disciplined Value Theme Screen Stocks

Ticker
BNK
CJR.B
CLS
CNQ
DII.B
EFX
EMP.A
ESI
FM
GTE
HSE
IAG
LUN
MFC
MIC
PD
PWF
PXT
SU
TGL
Company
Bankers Petroleum Ltd.
Corus Entertainment, Inc.
Celestica, Inc.
Canadian Natural Resources Ltd.
Dorel Industries, Inc.
Enerflex Ltd.
Empire Co. Ltd.
Ensign Energy Services, Inc.
First Quantum Minerals Ltd.
Gran Tierra Energy, Inc.
Husky Energy, Inc.
Industrial Alliance, Inc.
Lundin Mining Corp.
Genworth MI Canada, Inc.
Precision Drilling Corp.
Parex Resources, Inc.
Suncor Energy, Inc.
TransGlobe Energy Corp.
Price
$4.09
$21.21
$12.36
$41.38
$37.95
$17.46
$82.72
$11.95
$19.76
$4.96
$26.07
$47.06
$5.71
$22.54
$41.82
$8.47
$35.18
$9.15
$39.07
$4.04
BMO Rating*
NR
Mkt
Mkt
OP
Mkt
OP
Mkt
OP
Mkt
NR
Mkt
Mkt
OP
OP
OP
OP
Mkt
NR
OP
NR
Months In Screen
2
23
8
2
8
8
2
8
5
8
2
32
2
11
5
2
8
2
2
8
A member of BMO
Financial Group
47
December 1, 2014
2015
Market Outlook
BMO Capital Markets
Exhibit 55: Canadian Disciplined Value Total Return Snapshot

15%
12.6%
Canadian Disciplined Value

10%
9.9%
11.0%
S&P/TSX
6.3%
5%
1.1%
0%
-2.1%
-5%
-10%
-2.5%
-3.3%
-4.0%
-9.2%
-11.0%
-12.8%
-15%
1 Month
3 Months
6 Months
Year-to-Date
12 Months
CAGR Since 1999
A member of BMO
Financial Group
48
December 1, 2014
2015
Market Outlook
BMO Capital Markets
US/Canadian Core Plus Model Portfolio

The following portfolio is an actively traded model designed to encapsulate our current US
and Canadian Strategy opinions regarding the S&P 500 and S&P/TSX indices, sectors, and
industries.
Decision-making inputs: Investment Strategy Themes, Fundamental Opinions (BMO

CM Corp US and S&P) and Investment Strategy Quantitative Analysis
Time frame: 12-18 months
Rebalancing: Quarterly
Index: A simple blend of S&P 500 + S&P/TSX; current index composition: 90% US +
10% CDN
Portfolio changes: Updates will be made on a monthly basis and will be published
within the US Portfolio Concepts
US/Canadian Core Plus Model Portfolio Stocks

Ticker
Company
Consumer Discretionary (11% target weight vs. 11.8% index weight)
CMCSA
Comcast Corporation Class A
DIS
Walt Disney Company
JWN
Nordstrom, Inc.
MG-CA*
Magna International Inc.
NKE
NIKE, Inc. Class B
SBUX
Starbucks Corporation
TGT
Target Corporation
Consumer Staples (8% target weight vs. 9.8% index weight)
CL
Colgate-Palmolive Company
COST
Costco Wholesale Corporation
GIS
General Mills, Inc.
KO
Coca-Cola Company
L-CA*
Loblaw Companies Limited
Energy (8% target weight vs. 8.7% index weight)
CVX**
Chevron Corporation
DVN
Devon Energy Corporation
ECA-CA*
Encana Corporation
ENB-CA
Enbridge Inc.
SLB
Schlumberger NV
SU-CA*
Suncor Energy Inc.
TRP-CA
TransCanada Corporation
Financials (20% target weight vs. 16.3% index weight)
BAC
Bank of America Corporation
BMO-CA*
Bank of Montreal
GS
Goldman Sachs Group, Inc.
IFC-CA*
Intact Financial Corporation
MFC-CA*
Manulife Financial Corporation
MS
Morgan Stanley
TD-CA*
Toronto-Dominion Bank
TROW
T. Rowe Price Group
USB
US Bancorp
WFC
Wells Fargo & Company
Health Care (12% target weight vs. 14.2% index weight)
CELG
Celgene Corporation
GILD
Gilead Sciences, Inc.
JNJ
Johnson & Johnson
MDT
Medtronic, Inc.
A member of BMO
Financial Group
49
Price
BMO Rating*
$56.86
$91.92
$75.41
$120.19
$97.80
$79.70
$72.16
NR
OP
Mkt
OP
NR
NR
OP
$68.69
$139.75
$51.85
$44.29
$60.51
Mkt
NR
OP
Mkt
OP
$115.11
$64.02
$20.02
$53.54
$92.81
$39.07
$55.89
Mkt
OP
OP
OP
NR
OP
OP
$17.11
$83.59
$188.52
$79.78
$22.54
$35.12
$57.08
$83.11
$44.38
$54.28
NR
Mkt
NR
OP
OP
NR
OP
NR
Mkt
Mkt
$112.61
$100.30
$107.21
$73.48
OP
OP
OP
OP
December 1, 2014
2015
Market Outlook
BMO Capital Markets
US/Canadian Core Plus Model Portfolio Stocks

Ticker
Company
PFE*
Pfizer Inc.
TMO
Thermo Fisher Scientific Inc.
UNH
UnitedHealth Group Incorporated
Industrials (12% target weight vs. 10.5% index weight)
BA
Boeing Company
CP-CA*
Canadian Pacific Railway
DHR
Danaher Corporation
GE
General Electric Company
ITW
Illinois Tool Works Inc.
SRCL
Stericycle, Inc.
UNP*
Union Pacific Corporation
Information Technology (23% target weight vs. 19.9% index weight)
AAPL
Apple Inc.
CSCO
Cisco Systems, Inc.
EMC
EMC Corporation
GOOGL
Google Inc. Class A
IBM
International Business Machines Corporation
MSFT
Microsoft Corporation
ORCL
Oracle Corporation
TXN
Texas Instruments Incorporated
V
Visa Inc. Class A
Materials (2% target weight vs. 3.3% index weight)
ECL
Ecolab Inc.
PX
Praxair, Inc.
Telecommunications Services (3% target weight vs. 2.4% index weight)
BCE-CA*
BCE Inc.
T-CA*
TELUS Corporation
VZ
Verizon Communications Inc.
Utilities (1% target weight vs. 3.1% index weight)
CU-CA*
Canadian Utilities Limited Class A
Price
$31.10
$128.66
$98.11
BMO Rating*
Mkt
NR
OP
$134.78
$235.79
$83.45
$26.87
$95.53
$128.10
$123.31
NR
OP
OP
NR
OP
NR
OP
$119.00
$27.43
$30.04
$547.73
$161.95
$47.75
$41.87
$54.33
$257.26
OP
OP
OP
Mkt
Mkt
Mkt
OP
OP
NR
$113.75
$129.88
NR
NR
$52.87
$42.66
$50.04
OP
OP
OP
$40.36
OP
Source: BMO Capital Markets Investment Strategy. Prices as of 11/26/2014. Screened constituents as of 10/31/2014. *These stocks are
covered by BMO Nesbitt Burns, Inc. **These stocks are covered by BMO Capital Markets Ltd.; all others covered by BMO Capital
Markets Corp. ***Rating Key, according to BMO Capital Markets Equity Research: OP: Outperform, Mkt: Market Perform, Und:
Underperform, NR: Not rated by BMO Capital Markets. **These stocks are covered by BMO Capital Markets, Corp.; all others are
covered
by
BMO
Nesbitt
Burns,
Inc.
Click
here
for
disclosures
on
those
stocks:
http://researchglobal.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspx
A member of BMO
Financial Group
50
December 1, 2014
2015 Market Outlook
BMO Capital Markets
IMPORTANT DISCLOSURES
Analyst's Certification
I, Brian Belski, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I
also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in
this report
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their
affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating
new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA (exception:
Alex Arfaei). These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the NASD Rule 2711
and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst
account.
Company Specific Disclosures
For Important Disclosures on the stocks discussed in this report, please go to
http://researchglobal.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspx
Distribution of Ratings (September 30, 2014)
Rating
Category
Buy
BMO Rating
Outperform
BMOCM US
Universe*
44.3%
BMOCM US
IB Clients**
18.0%
BMOCM US
IB Clients***
60.3%
BMOCM
Universe****
43.9%
BMOCM
IB Clients*****
56.5%
Starmine
Universe
56.0%
Hold
Sell
Market Perform
Underperform
52.5%
3.2%
9.7%
5.3%
38.5%
1.3%
51.6%
4.5%
42.1%
1.4%
39.1%
4.9%
*
**
Reflects rating distribution of all companies covered by BMO Capital Markets Corp. equity research analysts.
Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking
services as percentage within ratings category.
***
Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking
services as percentage of Investment Banking clients.
**** Reflects rating distribution of all companies covered by BMO Capital Markets equity research analysts.
***** Reflects rating distribution of all companies from which BMO Capital Markets has received compensation for Investment Banking services as
percentage of Investment Banking clients.
Rating and Sector Key (as of April 5, 2013)

We use the following ratings system definitions:
OP = Outperform - Forecast to outperform the analysts coverage universe on a total return basis;
Mkt = Market Perform - Forecast to perform roughly in line with the analysts coverage universe on a total return basis;
Und = Underperform - Forecast to underperform the analysts coverage universe on a total return basis;
(S) = Speculative investment;
NR = No rating at this time; and
R = Restricted Dissemination of research is currently restricted.
BMO Capital Markets' seven Top 15 lists guide investors to our best ideas according to different objectives (CDN Large Cap, CDN Small Cap, US
Large Cap, US Small Cap, Income, CDN Quant, and US Quant have replaced the Top Pick rating).
Page51November28,2014
2015 Market Outlook
BMO Capital Markets
Prior BMO Capital Markets Rating System (January 4, 2010 April 4, 2013)
http://researchglobal.bmocapitalmarkets.com/documents/2013/prior_rating_system.pdf
Other Important Disclosures
For Important Disclosures on the stocks discussed in this report, please go to
http://researchglobal.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspx or write to Editorial Department, BMO Capital Markets, 3
Times Square, New York, NY 10036 or Editorial Department, BMO Capital Markets, 1 First Canadian Place, Toronto, Ontario, M5X 1H3.
Dissemination of Research
BMO Capital Markets Equity Research is available via our website https://research-ca.bmocapitalmarkets.com/Public/Secure/Login.aspx?Return
Url=/Member/Home/ResearchHome.aspx. Institutional clients may also receive our research via Thomson Reuters, Bloomberg, FactSet, and Capital
IQ. Research reports and other commentary are required to be simultaneously disseminated internally and externally to our clients.
General Disclaimer
BMO Capital Markets is a trade name used by the BMO Investment Banking Group, which includes the wholesale arm of Bank of Montreal and its
subsidiaries BMO Nesbitt Burns Inc., BMO Capital Markets Limited in the U.K. and BMO Capital Markets Corp. in the U.S. BMO Nesbitt Burns
Inc., BMO Capital Markets Limited and BMO Capital Markets Corp are affiliates. Bank of Montreal or its subsidiaries (BMO Financial Group)
has lending arrangements with, or provide other remunerated services to, many issuers covered by BMO Capital Markets. The opinions, estimates
and projections contained in this report are those of BMO Capital Markets as of the date of this report and are subject to change without notice. BMO
Capital Markets endeavours to ensure that the contents have been compiled or derived from sources that we believe are reliable and contain
information and opinions that are accurate and complete. However, BMO Capital Markets makes no representation or warranty, express or implied,
in respect thereof, takes no responsibility for any errors and omissions contained herein and accepts no liability whatsoever for any loss arising from
any use of, or reliance on, this report or its contents. Information may be available to BMO Capital Markets or its affiliates that is not reflected in this
report. The information in this report is not intended to be used as the primary basis of investment decisions, and because of individual client
objectives, should not be construed as advice designed to meet the particular investment needs of any investor. This material is for information
purposes only and is not an offer to sell or the solicitation of an offer to buy any security. BMO Capital Markets or its affiliates will buy from or sell
to customers the securities of issuers mentioned in this report on a principal basis. BMO Capital Markets or its affiliates, officers, directors or
employees have a long or short position in many of the securities discussed herein, related securities or in options, futures or other derivative
instruments based thereon. The reader should assume that BMO Capital Markets or its affiliates may have a conflict of interest and should not rely
solely on this report in evaluating whether or not to buy or sell securities of issuers discussed herein.
Additional Matters
To Canadian Residents: BMO Nesbitt Burns Inc. furnishes this report to Canadian residents and accepts responsibility for the contents herein subject
to the terms set out above. Any Canadian person wishing to effect transactions in any of the securities included in this report should do so through
BMO Nesbitt Burns Inc.
The following applies if this research was prepared in whole or in part by Andrew Breichmanas, Iain Reid, Tony Robson, David Round, Edward
Sterck or Brendan Warn: This research is not prepared subject to Canadian disclosure requirements. This research is prepared by BMO Capital
Markets Limited and subject to the regulations of the Financial Conduct Authority (FCA) in the United Kingdom. FCA regulations require that a
firm providing research disclose its ownership interest in the issuer that is the subject of the research if it and its affiliates own 5% or more of the
equity of the issuer. Canadian regulations require that a firm providing research disclose its ownership interest in the issuer that is the subject of the
research if it and its affiliates own 1% or more of the equity of the issuer that is the subject of the research. Therefore BMO Capital Markets Limited
will disclose its and its affiliates ownership interest in the subject issuer only if such ownership exceeds 5% of the equity of the issuer.
To U.S. Residents: BMO Capital Markets Corp. furnishes this report to U.S. residents and accepts responsibility for the contents herein, except to the
extent that it refers to securities of Bank of Montreal. Any U.S. person wishing to effect transactions in any security discussed herein should do so
through BMO Capital Markets Corp.
To U.K. Residents: In the UK this document is published by BMO Capital Markets Limited which is authorised and regulated by the Financial
Conduct Authority. The contents hereof are intended solely for the use of, and may only be issued or passed on to, (I) persons who have professional
experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion)
Order 2005 (the Order) or (II) high net worth entities falling within Article 49(2)(a) to (d) of the Order (all such persons together referred to as
relevant persons). The contents hereof are not intended for the use of and may not be issued or passed on to, retail clients.
Unauthorized reproduction, distribution, transmission or publication without the prior written consent of BMO Capital Markets is strictly prohibited.
2015 Market Outlook
BMO Capital Markets
Click here for data vendor disclosures when referenced within a BMO Capital Markets research document.
ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST

BMO Financial Group (NYSE, TSX: BMO) is an integrated financial services provider offering a range of retail banking, wealth management, and investment and
corporate banking products. BMO serves Canadian retail clients through BMO Bank of Montreal and BMO Nesbitt Burns. In the United States, personal and
commercial banking clients are served by BMO Harris Bank N.A., Member FDIC. Investment and corporate banking services are provided in Canada and the US
through BMO Capital Markets.
BMO Capital Markets is a trade name used by BMO Financial Group for the wholesale banking businesses of Bank of Montreal, BMO Harris Bank N.A, BMO
Ireland Plc, and Bank of Montreal (China) Co. Ltd. and the institutional broker dealer businesses of BMO Capital Markets Corp. (Member SIPC), and BMO
Capital Markets GKST Inc. (Member SIPC) in the U.S., BMO Nesbitt Burns Inc. (Member Canadian Investor Protection Fund) in Canada, Europe and Asia, BMO
Capital Markets Limited in Europe and Australia and BMO Advisors Private Limited in India.
Nesbitt Burns is a registered trademark of BMO Nesbitt Burns Corporation Limited, used under license. BMO Capital Markets is a trademark of Bank of
Montreal, used under license. "BMO (M-Bar roundel symbol)" is a registered trademark of Bank of Montreal, used under license.
Registered trademark of Bank of Montreal in the United States, Canada and elsewhere.
TM Trademark Bank of Montreal
COPYRIGHT 2014 BMO CAPITAL MARKETS CORP.
A member of BMO
Financial Group
Equity Research
director of canadian Equity research
Aine OFlynn, CFA
416-359-4212
Financials ____________________
canadian Banks
Sohrab Movahedi
416-359-7157
Us Banks
Lana Chan
Peter Winter
212-885-4109
212-885-4108
director of Us Equity research

Christine Farkas, CFA
MatErials ____________________
Base Metals & Mining
Tony Robson
+44 (0)20 7246 5433
Aleksandra Bukacheva, CFA, MSc. 416-359-8456
David Gagliano, CFA
212-885-4013
Edward Sterck
+44 (0)20 7246 5421
212-885-4113
EnErgy & UtilitiEs ____________

integrateds
Randy Ollenberger
Iain Reid
403-515-1502
+44 (0)20 7246 5420
E&P
Jim Byrne, P. Eng., CFA
Jared Dziuba, CFA
Phillip Jungwirth, CFA
Dan McSpirit
David Round
Gordon Tait, CFA
Brendan Warn
403-515-1557
403-515-3672
303-436-1127
303-436-1117
+44 (0)20 7664 8052
403-515-1501
+44 (0)20 7664 8087
insurance
Tom MacKinnon, FSA, FCIA
416-359-4629
insurance/non-life
Charles J. Sebaski
212-885-4094
Precious Metals & Minerals

David Haughton
416-359-4052
Andrew Breichmanas, P.Eng. +44 (0)20 7246 5430
Andrew Kaip, P. Geo.
416-359-7224
Brian Quast, P. Eng., JD
416-359-6824
trading Venues/Exchanges
Jillian Miller
404-926-1581
commodity strategy
Jessica Fung
416-359-8455
Oil & gas: services & Equipment

Mike Mazar, CPA, CA, CFA
403-515-1538
212-885-4176
Packaging & Forest Products

Mark Wilde, PhD
212-883-5102
chemicals & Fertilizers

Joel Jackson, P.Eng., CFA
416-359-4250
Electric Utilities & independent Power

Michael S. Worms
212-885-4031
Ben Pham, CFA
416-359-4061
Financial technology
Paul Condra
real Estate investment trusts
Heather C. Kirk, CFA
Troy MacLean, CFA
Paul E. Adornato, CFA
416-359-4030
416-359-8366
212-885-4170
cOnsUMEr ____________________
retail - Broadlines/Hardlines
Wayne Hood
404-926-1590
retail - apparel & specialty

John D. Morris
212-885-4016
retailing/consumer
Peter Sklar, CPA, CA
416-359-5188
Food retail
Kelly Bania
212-885-4162
Food & ag Products

Kenneth B. Zaslow, CFA
212-885-4017
Food & Beverage

Amit Sharma, CFA
212-885-4132
restaurants
Andrew Strelzik
212-885-4015
indUstrials __________________
713-546-9756
713-546-9741
transportation & aerospace

Fadi Chamoun, CFA
416-359-6775
diversified industrials
Charles D. Brady
Bert Powell, CFA
617-960-2363
416-359-5301
Biotechnology
Jim Birchenough, M.D.
415-591-2129
212-883-5112
Medical technology
Joanne K. Wuensch
212-883-5115
services - Equipment distribution & E&c

Bert Powell, CFA
416-359-5301
Managed care/Facilities
Jennifer Lynch
212-885-4059
services - Business services

Jeffrey M. Silber
Pharmaceuticals
Alex Arfaei
212-885-4033
specialty Pharmaceuticals
David Maris
212-885-4091
Machinery
Joel Tiss
212-885-4063
tEcH / MEdia / tElEcOM ________

it Hardware & it services
Keith Bachman, CFA
212-885-4010
Household & Personal care Products

Connie M. Maneaty
212-885-4004
communications Equipment
Tim Long
212-885-4101
toys & leisure

Gerrick L. Johnson
212-883-5192
information technology
Thanos Moschopoulos, CFA
416-359-5428
416-359-5188
semiconductors
Ambrish Srivastava, Ph.D
415-591-2116
services - Education
Jeffrey M. Silber
212-885-4063
software
Joel P. Fishbein, Jr
212-885-4159
special situations
Stephen MacLeod, CFA
416-359-8069
telecom/Media/cable
Tim Casey, CFA
416-359-4860
telecom services
Kevin Manning
212-885-4102
auto Parts
Peter Sklar, CPA, CA
Pipelines
Carl Kirst, CFA
Danilo Juvane, CFA
HEaltHcarE __________________
MacrO ________________________
investment strategy
Brian G. Belski
Economics
Douglas Porter, CFA
Michael Gregory, CFA
Earl Sweet
Quantitative/technical
Mark Steele
Ken Hartviksen, CFA
Qin Lu
212-885-4151
416-359-5761
416-359-4887
312-845-5025
416-359-4747
416-359-4407
416-359-4641
416-359-6211
416-359-6187
Media - digital Entertainment and internet

ecommerce
Edward S. Williams
212-885-4054
Media and internet Marketing
Daniel Salmon
212-885-4029
1 First Canadian Place, P.O. Box 150, Toronto, ON M5X 1H3 416-359-4000 Tour McGill College, 1501 McGill College Ave., Suite 2800, Montreal, PQ H3A 3M8 900, 525 - 8th Avenue S.W., Calgary, AB. T2P 1G1
95 Queen Victoria Street, London, U.K., EC4V 4HG 3 Times Square, 7th Floor, New York, NY 10036 212-885-4000 200 Tower Place, 3348 Peachtree Road, NE, Suite 1430, Atlanta, GA 30326 100 High Street,
26th Floor, Boston, MA 02110 617-451-0670 600 17th Street, Suite 1704S, South Tower, Denver, CO 80202 700 Louisiana Street, Suite 2100, Houston, TX 77002 713-546-9746
One Market, Spear Tower, Suite 1515, San Francisco, CA 94105 415-591-2100 115 S. LaSalle Street, Chicago, IL 60603
ABOUT BMO CAPITAL MARKETS

BMO Capital Markets is a leading, full-service North American financial services provider
offering corporate, institutional and government clients access to a complete range of
products and services. These include equity and debt underwriting, corporate lending
and project financing, merger and acquisitions advisory services, securitization, treasury
management, market risk management, debt and equity research and institutional sales
and trading. With more than 2,300 professionals in offices in 29 locations around the world,
including 16 in North America, BMO Capital Markets works proactively with clients to provide
innovative and integrated financial solutions.
BMO Capital Markets is a member of BMO Financial Group (NYSE, TSX: BMO), one of the
largest diversified financial services providers in North America with US$538 billion total
assets and approximately 47,000 employees as at July 31, 2014. For more information, visit
www.bmocm.com.
www.bmocm.com
BMO Capital Markets is a trade name used by BMO Financial Group for the wholesale banking businesses of Bank of Montreal, BMO Harris Bank N.A. (formerly Harris N.A.) and Bank of Montreal
Ireland p.l.c, and the institutional broker dealer businesses of BMO Capital Markets Corp. and BMO Capital Markets GKST Inc. in the U.S., BMO Nesbitt Burns Inc. (Member Canadian Investor Protection
Fund) in Canada, Europe and Asia, BMO Nesbitt Burns Securities Limited (registered in the United States and a member of FINRA), BMO Capital Markets Limited in Europe, Asia and Australia and BMO
Advisors Private Limited in India.
Registered trademark of Bank of Montreal in the United States, Canada and elsewhere.

2015 Outlook

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

2015 Outlook

Uploaded by

Copyright:

Available Formats

December 1, 2014

2015 Market Outlook

Nicholas Roccanova, CFA

Ryan Bohren, CFA

BMO Capital Markets

BMO Capital Markets

BMO Capital Markets

2015 Market Outlook

BMO Capital Markets

BMO Capital Markets

2015 Market Outlook

Exhibit 1: Stages of Secular Bull Markets

2015 will represent a

Source: BMO Capital Markets Investment Strategy Group.

BMO Capital Markets

S&P 500 2015 Price Target: 2,250; EPS: $126

Summary of Price and EPS Target Model Internals:

Exhibit 2: Levels of Equity Engagement Remain Low

Source: BMO Capital Markets Investment Strategy Group, ICI.

Exhibit 3: 2015 S&P 500 Targets

Earnings Per Share Target

Expected EPS Growth*

Source: BMO Investment Strategy Group. *Based on our 2014 target.

BMO Capital Markets

Fundamental and Macro Data Suggest Middle-of-the-Road Returns

Exhibit 4: S&P 500 P/E Ratio and Subsequent Price Returns

Between 15x and 20x

Greater than 20x

Source: BMO Capital Markets Investment Strategy Group, Bloomberg.

P/E levels Between 15x and 20x

Source: BMO Capital Markets Investment Strategy Group, Bloomberg.

BMO Capital Markets

Non-recession Bear Market

Non-recession Bear Market

Yield Curve, Recessions & Bear Markets

BMO Capital Markets

Old Time HockeyPut Me in, Coach

Exhibit 7: Fundamental Factors Are Outperforming Again, Something We Expect to

BMO Capital Markets

Diffuse Fear With Fundamentals

S&P 500 (Y/Y % Chg.)

S&P 500 Trailing 4 Quarter EPS Growth

Leading Indicator Index (Y/Y % Chg., rhs)

BMO Capital Markets

Three- to Five-Year US Stock Return Outlook

Years Into Secular Cycle

Source: BMO Capital Markets Investment Strategy Group, Bloomberg.

S&P 500 Average Std. Dev. of Monthly Returns During

Source: BMO Capital Markets Investment Strategy Group, Bloomberg.

BMO Capital Markets

Three- to Five-Year US Stock ThemeRedistribution of Corporate and

Exhibit 11: Share Buybacks Are Starting to Lose Their Appeal

Source: BMO Capital Markets Investment Strategy Group, FactSet, CompuStat.

Exhibit 12: Corporate Cash Remains at Historic Levels

Source: BMO Capital Markets Investment Strategy Group, BEA.

BMO Capital Markets

Source: BMO Capital Markets Investment Strategy Group, BEA.

Exhibit 14: Plant and Equipment Are Aging

Source: BMO Capital Markets Investment Strategy Group, BEA.

BMO Capital Markets

Exhibit 15: Cyclical Areas Benefit From Improved Capex

Source: BMO Capital Markets Investment Strategy Group, BEA.

BMO Capital Markets

bonds may become capital destructors in retirement portfolios, we expect a significant