Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
CIBC analyst Sumayya Syed surveyed the third quarter for the REIT sector,
“Q3 saw REITs continuing to deliver solid results while maintaining their outlooks. Retail leasing spreads in the mid single digits to low teens continued unabated, and reflecting such, the group has been the best-performing sub-sector YTD. While valuation has checked back, the safety names’ – i.e. CHP, CRT and APR – units notably lead the sector on valuation and are within 10% of NAV. In retail we like PMZ for NOI [net operating income] growth runway and potential for valuation to catch up to peers. Industrial results demonstrated the stickiness of rents, with the odd step back in occupancy. However, valuation continues to be dictated by supply concerns. DIR looks attractive on a growth and valuation basis. 2025 and 2026 FFO [funds from operations] growth are 10% and 5% respectively, while units are trading at a ~20% discount to NAV … industrial REITs continued delivering sector-leading SP [same property] growth in Q3, followed by retail REITs at ~1%–4%+. PMZ’s 4.6% SP growth was above the retail subset”
Ms. Syed has outperform ratings on PRO REIT, Automotive Properties REIT, H&R REIT, Nexus Industrial REIT, Granite REIT, Crombie REIT, Dream Industrial REIT and Primaris REIT
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BMO analyst Jeremy McCrea detailed the energy stocks being bought by institutional investors,
“What ‘energy-weighted’ specialty funds are buying/selling. Typically, these funds are early movers and closer to company management including field[1]level operations (of the 37 high-energy focused funds we track). The top names held by these energy funds continue to be ARC, Tourmaline, and Topaz (with NuVista and Peyto new to the list vs. previous quarters) … The best-performing names in 3Q24 were CR (+67%), TPZ (+8%), PSK (+6%), PEY (+6%), and TVE (+5%) (vs. the equally weighted average of the sector at -7%). If we look at the funds that had the foresight to buy these names before their run (i.e., in the 2Q24), these funds today are now buying PrairieSky, Topaz, and MEG … Names with high buyer/seller ratios include Tamarack, Topaz, and Cardinal … We highlight the names that have seen the most ‘new buyers.’ Names to highlight include Spartan, Obsidian, and Veren”
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Goldman Sachs U.S. economist Jan Hatzius is among the mot prominent pundits in the world. His outlook for 2025 is out, but the most succinct way to summarize the forecast is to let his colleague, chief U.S. equity strategist David Kostin, do it for us,
“This week our economists published their 2025 Global Outlook. They expect the second Trump Administration will bring higher China and auto tariffs, some tax cuts, and regulatory easing. They forecast average 2025 real GDP growth of 2.5% in the US, 0.8% in Euro Area, 1.2% in Japan, and 4.5% in China. Our economists expect US core PCE inflation will decelerate to 2.4% by late next year and the Fed will cut the funds rate to 3.25-3.5%. The possibility of large across-the-board tariffs represents a key risk to their outlook. Global cross-asset market themes include a growing valuation challenge for US equities and credit spreads because our optimistic macro forecasts are largely reflected in risk asset prices”
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Diversion: “More Severe Mpox Variant Found in the U.S. for the First Time. Here’s What We Know” – Gizmodo