Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
RBC Capital Markets analyst Maurice Choy surveyed the Canadian regulated utilities sector,
“Recent trends add to a long list of supportive secular energy growth trends... As part of the Q1/24 results releases, we saw the reaffirmation of the utilities’ long runway of growth opportunities relating to the energy transition, and notably, we highlight that Canadian Utilities continues to advance its proposed $4.5-5.0 billion Heartland Hydrogen Hub. We also heard initial discussions on the companies’ longer-term opportunities relating to data centers, generative AI, and onshoring as themes that support growth in electricity and likely gas demand; broadly speaking, we believe that this opportunity set is relatively longer-dated and location-specific, with Fortis noting potential data center growth in the mid-west U.S. and potential industrial growth in Arizona, while Emera commented that it has yet to see the data center trend impact Tampa Electric. ...but that first requires being in the “right” financial setup. As balance sheet health remains topical and costs of capital continue to be elevated, many investors continue to look out for any tangible actions by the companies that are aimed at improving their financial setups ahead of their respective growth opportunities materializing”
Mr. Choy has outperform ratings on Emera Inc. and Transalta Corp.
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There is a growing consensus among investors that copper prices are ahead of themselves for now, but the positive long-term outlook remains intact.
This is reflected in BMO mining analyst Jackie Przybylowski’s Wednesday research report Themes from the Road: Directional Confusion,
“We met Canadian investors in Montreal and Vancouver over the past week, beginning shortly after copper started to move lower from its all-time peak pricing. We saw two distinct approaches - (1) mean reversion: copper spot price had run ahead of fundamentals and was due for a correction; (2) momentum: other investors believe equally strongly that tight inventories and attractive long-term supply/demand fundamentals should support prices higher from those recent peak levels. Gold and precious metals were less controversial with broad consensus agreement on ‘stronger for longer’ commodity prices and increasingly compelling equity investment options’
Ms. Przybylowski has outperform ratings on Kinross Gold Corp., Hudbay Minerals Inc., Barrick Gold Corp., Newmont Corp., Royal Gold Inc., Agnico Eagle Mines Ltd., Pan American Silver Corp., Wheaton Precious Metals Corp., Lundin Mining Corp and Franco-Nevada Corp.
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BofA Securities analyst Wamsi Mohan sees the proliferation of AI as a ‘once in a decade upgrade event’ for Apple Inc.,
“We view the upcoming AI enabled phones (IntelliPhones) to drive a multi-year upgrade cycle similar to the step function improvement driven by the introduction of smartphones. We expect the adoption curve of AI phones to be faster than the adoption of smartphones, 5G (Exhibit 1). With an installed base of over 4bn smartphones, we see the opportunity for the next upgrade cycle to be once in a decade type of event. While we do not expect all these features at WWDC, we do expect a pathway for the IntelliPhones to become mainstream especially as conversational AI gets more integrated into daily use along with the backend of AI agents. Maintain Buy on multi-year upgrade cycle, gross margin upside and secular services growth. What can an IntelliPhone do that’s different? Context awareness will be the key differentiator. IntelliPhones will leverage advanced machine learning and AI technologies to offer superior personal assistance, language processing, health monitoring, photography, security, battery management, AR/VR experiences and customizable user experiences. As AI technology evolves the gap between IntelliPhones and traditional smartphones is likely to widen further by offering even more sophisticated and personalized functions driving the desire to upgrade”
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Diversion: “Updated Formula on Alien Intelligence Suggests We Really Are Alone in the Galaxy” – Gizmodo