Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
The strategy team at Scotiabank went all in on precious metals stocks “a tad late” by their own admission for their quantitatively driven top 30 Canadian stock picks,
“Top 30 additions/deletions: Additions (PAAS, CG, FVI, SIL, NGD, IMG, and CEU) almost all come from Gold and Precious Metal miners. CIX, ONEX, EQB, MATR, FTT, CSH-U, and STN are deleted. Miners jump to first place, with Energy in second. Financials and Industrials are in distant third/fourth places … Resource rankings continue to surge, focused on Miners, as Growth and Momentum rankings increase some more. Both Cyclicals and Defensives rankings retreat, with few sub-sectors spared. In Cyclicals, Industrials and Discretionary lose out the most, while Tech seems to be forging a bottom after having fallen every month since February. Meanwhile, in Defensives, Staples and Pipelines managed some small ranking gains while all other sectors plunged further. Overall, our Cyclicals-over-Defensive bias falls some more but remains high. Sector-wise, Energy, Financials, Gold miners, and Staples are the highest-ranked sectors”
The list as it stands now is Secure Energy Services, Athabasca Oil, Imperial Oil, CES Energy Solutions, Suncor Energy, ARC Resources, MEG Energy, Headwater Exploration, Hudbay Minerals, Kinross Gold, IAMGOLD, Dundee Precious Metals, Centerra Gold, New Gold, Fortuna Silver Mines, Pan American Silver, SilverCrest Metals, Stella-Jones, AtkinsRealis Group, Badger Infrastructure Solutions, Brookfield Business Partners, Linamar, Dollarama, North West Co., Canadian Western Bank, goeasy, Fairfax Financial Holdings, Manulife Financial, Celestica and AltaGas.
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The global mining research team at RBC Capital Markets made some additions to their best ideas stock list for the third quarter,
“We have maintained our sector weightings : This includes our overweight rating on Base Metals, Precious Metals, Diversifieds, and Uranium, and our market weight view on Fertilizers . Best Idea additions : We added Osisko Gold Royalties (OR CN), Artemis Gold (ARTG CN) and Torex Gold (TXG CN) to our Best Ideas list … The 2 Q24 Best Ideas portfolio increased 5 . 9 % outperforming the MSCI Benchmark which was up 0 . 7 %”
The list as it stands now includes Agnico Eagle, Gold Fields, Royal Gold, G Mining, New Gold, Seabridge, Adriatic Metals, Hochschild, De Grey, Capstone Copper, Hudbay Minerals, Ivanhoe Mines, Sandfire, Pilbara Minerals, Anglo American, Glencore, Teck Resources, Champion Iron, Cameco, NexGen, CF Industries, Nutrien.
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BMO energy infrastructure Ben Pham summarized interest in the income-heavy energy infrastructure sector after a marketing tour in Europe and the U.S.,
“Stock interest: (1) In the pipes, TRP (Mkt) with the upcoming liquids spin dominating conversations. Conversely, GEI (Mkt) inquiries were limited despite a potential positive near-term catalyst on recontracting its U.S. oil export terminal and discounted valuation (~9.5x EV/EBITDA vs. peers ~10.5x). (2) In utilities, focus was on asset sales/balance sheet improvement stories, particularly EMA (OP) following its LIL sale and AQN (OP) with its pending renewable carve-out. Consistent feedback we received is the Cdn utility names screen expensive relative to U.S. and European names; and (3) In renewables, interest levels were highest in BLX (OP) with its growth pipeline singled out as being relatively attractive, followed by our Top Pick NPI (OP) where we received mixed investor feedback. Notably, power company TA (OP) saw an uptick in inquiries, particularly from U.S. fast money investors. Most discussed themes: (1) coverage exposure to datacenter growth and related energy needs, particularly in power; (2) recent acceleration of Western Cdn. production on the back of improving egress (i.e., inaugural West Coast LNG, TMX); and (3) thoughts on the Cdn. bond yield outlook following the BoC rate cut”
Mr. Pham has outperform ratings on Pembina Pipeline Corp., Emera Inc., Canadian Utilities Ltd., Hydro One Ltd., Altagas Ltd., Brookfield Renewable Partners, Algonquin Power and Utilities, Northland Power Inc., Boralex Inc. and Atco Ltd.
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Diversion: “The 10 Best Movies of the Year … So Far” – The Ringer (podcast)