Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
BMO analyst Ben Pham provided his top five stock ideas in the yield-heavy energy infrastructure sector,
“We are rolling forward our valuation base to 2026 vs. 2025 and introducing our 2027 estimates, driving target price increases for the majority of our Cdn. Energy Infrastructure coverage largely reflecting new organic growth projects while keeping solidly intact our 3% 10-year GoC interest rate assumption. Also, we are revising our pecking order/Top 5 Best Ideas: Northland Power is still our Top Pick (NPI; OP; $30 target unchanged), followed by TransAlta (TA; OP; new $17 target), Boralex (BLX; OP; new $46 target), AltaGas (ALA; OP; new $40 target) and Pembina Pipeline (PPL; OP; new $58 target). Our previous pecking order was NPI, ALA, PPL, AQN (now restricted), and ACO.X”
***
CIBC analyst Ian de Verteuil wrote that the time is now for domestic income stocks in The “When” For Canadian High Dividend Stocks Is Now ,
“We have previously shown there has been “excess” funds flow into term deposits on bank balance sheets over the past two years. We estimate the excess funds in fixed income products in Canada (inclusive of money market and HISA products) at over $200 billion currently. With falling rates, it makes intuitive sense that some of this will reverse – but also reasonable to ask “when” will this occur? … We believe high dividend paying Canadian stocks have been a more “natural” traditional home for these funds. Dividends have tax advantages over interest income, and stocks have the benefit of dividend growth over time. Sectors such as REITs, Utilities, Telecoms and Financials have added appeal of better-than-average business and earnings stability. The relative yield of these stocks (when compared with 2-year government rates) is becoming increasingly attractive. We are now largely back above the zone which accelerated flow into term deposits, and if rates fall further as we expect, fund flows should reverse”
Outperform rated stocks in these dividend sectors include H&R REIT, Nexus Industrial REIT, Automotive Properties EIT, Granite REIT, Crombie REIT, PRO REIT, Dream industrial REIT, Primaris REIT, Northland Power Inc., Boralex Inc., Atco Ltd., Brookfield Renewable Partners, Transalta Corp., Enbridge inc., Altagas Ltd., Brookfield Infrastructure Partners, and Gibson Energy.
***
BofA Securities U.S. equity and quant strategist Savita Subramanian published her monthly update on top ten stock picks for growth and value. The methodology for value involves screens for earnings surprise, a BofA buy rating, and trailing PE ratio. For growth, earnigs surprise and buy rating are also involved along with high five year earnings estimates.
Amazon.com has been replaced by Uber in the growth screen. The other nine companies are Allstate Corp., Alphabet, Eli Lilly, Meta Platforms, Netflix, Progressive Corp, T-Mobile US, Take-Two (TTWO), and Warner Bros.
Ford Motor was replaced by Everest Group Ltd in the value list. Arch Capital, Aflac, Ameriprise Fin., Darden Restaurants, Devon, Entergy Corp., Interpublic Group, Raymond James and Ralph Lauren are the other names.
***
Diversion: “How Bloodthirsty Were Vikings? New Study Challenges Long-Held Assumptions” – Gizmodo