Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Scotiabank real estate analyst Mario Saric interpreted new data on rental costs,
“Rentals.ca released June Rental data on July 9, with flat month-over-month (m/m) national rent (+2.6% y/y) decelerating from +1% in May (vs. April rent), and masking regional discrepancies. Edmonton delivered the best m/m growth at 1%, with Toronto the worst at -2.6%; we think correlates with relative affordability driving continued intraprovincial migration into Alberta. We estimate KMP markets saw 0.7% m/m growth, leading the REITs, with MI the lowest at 1.7% m/m erosion, offsetting the 0.6% est. m/m gain in May … We cited concerns over market rent erosion (on potential immigration changes) and lower affordability as a near-term obstacle to more pronounced fund flows into CAD Apartment REITs. That said, we believe strong Q2 and Q3 results (including acceleration in FFOPU [funds from operations per unit] growth) should take unit prices higher, driving outperformance vs. CAD REIT sector … Top Picks remain IIP [Interrent REIT] and CAR [Canadian Apartment Properties REIT]”
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BMO Capital Markets analyst Ameet Thakkar provided top picks and broad strategy in the renewable energy sector,
“Our LT stock selection criteria continues to prioritize policy tailwinds, rising/visible demand and that can maintain or grow market share rather than rate of change stories. Our top picks, FLNC [Fluence Energy Inc.] and FSLR [First Solar Inc.], remain unchanged (our only Outperform rated names). However, the setup into FLNC’s upcoming FY 3Q 2024 earnings call is not favorable. We see downside to the midpoint of FLNC’s FY 2024 revenue guidance. We expect a relatively quiet quarter from FSLR with respect to bookings but are watching for ASP progression. For solar trackers, we expect NXT {Nxt Energy Solutions Inc.] to continue to execute but see risk to ARRY’s FY 2024 guidance on project delays but think this trade may have already played out. We see residential solar demand as moribund overall but see more positive updates from both NOVA and RUN. ENPH should largely deliver on estimates/guidance and is tactical longs into prints. SEDG remains challenged. Slim pickings in hydrogen.”
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Richard Bernstein Advisors asked Does value matter anymore?,
“The U.S. stock market has become a seller’s market because of investors’ minimal concerns about valuation. Valuation still matters to sellers, and business owners would never sell without a thorough valuation assessment. However, the meteoric rise in the popularity of more speculative, momentum-oriented investment strategies that generally ignore valuation is effectively handing “free” money to sellers …Contrary to the widely held belief that growth investing is about an exciting future, in reality growth investing is largely based on the notion that only a select universe of companies can actually grow. That rather pessimistic view of the lack of overall earnings growth has become unrealistic (there are currently about 160 companies within the S&P 500 with earnings growth of 25% or more), and that extreme view has led growth investors to generally ignore valuation … Valuation drives longer-term returns in the stock market and in the overall economy. The wide range of undervalued stocks currently within the global equity markets suggests a massive number of potential investment opportunities. We believe this undervalued universe is so broad and so large that it presents a once-in-a-generation investment opportunity”
“Does value matter anymore?” – RB Advisors
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Diversion: “Trump is Planning for a Landslide Win” – The Atlantic