Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
BMO Capital Markets quarterly best of BMO list of analyst top picks has seen significant changes.
Canadian energy analyst Randy Ollenberger has switched from Canadian Natural Resources to Cenovus Energy.
Analyst John Gibson is now favouring CES Energy over Secure Energy services and U.S. energy analyst Phillip Jungwirth moved from Chevron Corp. to Baker Hughes.
Tamy Chen has moved from Boyd Group Services to Maple Leaf Foods and Stephen MacLeod now recommends Premium Brands Holdings over CCL Industries.
Perhaps most notably, bank analyst Sohrab Movahedi changed his top recommendation from CIBC to Royal Bank.
The list as it stands now is Baker Hughes Company, Cenovus Energy, CES Energy Solutions, NuVista Energy, Agnico Eagle Mines, Axalta Coating Systems, Beacon Roofing Supply Inc., Calibre Mining Corp., Capstone Copper, Centamin, Constellium, Corteva Agriscience, Entegris Inc., Hudbay Minerals, Osisko Mining, Torex Gold Resources, Canadian Pacific Kansas City Ltd., Waste Connections, Camping World Holdings, Constellation Brands, Domino’s Pizza, Maple Leaf Foods, NIKE, Pilgrims Pride, Premium Brands Holdings, Stride Inc., Walmart Inc., Eli Lilly, Korro Bio, Inc., Regeneron Pharmaceuticals, AerCap Holdings, Arthur J. Gallagher 8 Co., Fairfax Financial Holdings, goeasy, Remitly Global Inc., Royal Bank, Boardwalk REIT, Equinix, Equity Residential, Ventas, Amazon.com Inc., Constellation Software, Microsoft, Netflix Inc., PTC Inc., TELUS, Trade Desk Inc., Fluence Energy Inc., NiSource Inc., and Northland Power.
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CIBC REIT analyst Dean Wilkinson assessed the outlook for the sector in the wake of the rate cut,
“We still believe that 2024 will be a flat valuation year with returns dominated by current yields. That being said, the XRE has posted a decrease of ~8% YTD vs. the broader market (TSX) up ~5%, ultimately supportive of the sector underweight we had going into the beginning of the year. Today’s rate decrease could perhaps signal a shift in sentiment towards the “bond proxies” and result in the space catching up on a relative basis over the latter half of the year as the yield curve normalizes … The REIT sector is trading at a ~23% discount to NAV, a level that has historically represented a more compelling value proposition. Going into the latter half of the year, we continue to favor the Industrial and Apartment subsets given the higher growth potential we see for them through 2025 and a deeper historical valuation discount; our top picks are Killam (KMP.U) in the Apartment space and Dream Industrial (DIR.U) in the Industrials”
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BofA investment strategist Michael Hartnett continues to look for market trouble in his punchy weekly Flow Show report,
“S&P 500 up 12.3% YTD…ex-NVDA up 7.9%, ex-”Magnificent 7″ up 4.9%, ex-”AI Big Ten”* [NVDA, GOOG, MSFT, META, AMZN, AVGO, QCOM, AMD, AMAT, MU] up 3.6%... narrow monopolistic tech “revenue” bull…AI Big Ten market cap up from $5tn to $13tn since Q1′23 … [Market expectations for] Fed +6 cuts to just 1 or 2, US govt spending -3% past 12 months, ISM’s contracting…macro driving 10-20% corrections in capital goods/trucking (eg FAST, LECO, MSM, even PH) + homebuilders no rally with bonds; … Fed cuts 1st hint of trouble but if cyclicals can’t rally as Fed cuts get priced back in H2 means “no” landing odds flip back to “hard” & bonds outperform … Zeitgeist : “You know it’s a bubble when everyone starts telling you it’s not a bubble.””
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Diversion: “Concern rises over AI in adult entertainment” – BBC News