Globe editors have posted this research report with permission of ARC Independent Research. This should not be construed as an endorsement of the report’s recommendations. For more on The Globe’s disclaimers please read here.
The ARC Independent Research Recommended List aims to provide a consolidated, high-level view into our research recommendations and in-depth company reports, by focussing on some top names in each sector, and identifying names that we believe investors should avoid.
Some highlights of the report:
We recommend avoiding BCE Inc based on valuation and due to the continued campaign by the board to approve increases to the dividend that are well beyond its own guardrails.
We recommend avoiding Dollarama Inc based on its high valuation versus peers and against its own multiple historically.
We recommended avoiding Brookfield Asset Management based on valuation concerns, accounting issues and corporate governance matters.
We recommend avoiding Canadian National Railway based on valuation as we believe that much of the positive outlook on improving operating ratios is already priced into the stock, and the company will face increasingly tougher comps moving through 2023.
We recommend avoiding Hydro One Ltd based on valuation and limited geographical exposure.
We recommend avoiding Blackberry Inc based on its valuation relative to peers.
We recommend avoiding Labrador Iron Ore Royalty Corp based on valuation.
And for names viewed favourably:
We recommend Quebecor Inc based on its growing wireless business and attractive valuation versus peers.
We highlight Suncor Energy based on its attractive valuation, integrated business model, and ability to generate significant cash flows, despite a history of worker safety issues.
We recommend Dollar Tree Inc based on its recession-resistant characteristics and its ability to manage through an inflationary environment.
We highlight Northland Power for its ability to benefit from decarbonization efforts and the transition to renewable energy by governments and private entities.
We recommend Manulife Financial based on its attractive valuation relative to peers.
We recommend Wheaton Precious Metals given its portfolio of diversified, high-quality, low-cost and long-life assets, exploration potential and production upside.
We recommend Canadian Apartment Properties REIT for its successful growth through a combination of rent increases on renewals and turnovers, property improvements and expansions, and accretive portfolio acquisitions.
We favour Microsoft Corp for its strong performance aided by sustained cloud growth as more companies transition to online subscriptions.
We recommend Walmart Inc based on sustained long-term growth as the company continues to invest in technology, logistics, and e-commerce capabilities to transform into an omnichannel retailer.
Read the full report here.
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