Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
BMO Capital Markets strategist Jeremy McRea lists the major trends for institutional investors buying and domestic energy stocks,
“The top names held by [the 37 high energy focused funds we track] continue to be ARC, Tourmaline, Topaz, Whitecap (with Paramount new to the list vs. last year) … The best-performing names in 2Q24 were NVA (+20%), SCR (+13%), POU (+13%), BIR (+13%), and TPZ (+8%) (vs. the equally weighted average of the sector at -1%). If we look at the funds that had the foresight to buy these names before their run (i.e., in the previous quarter), these funds today are now buying Paramount, PrairieSky, and Peyto … names that saw existing shareholders add to their positions should highlight confidence … Names with high buyer/seller ratios include Paramount, Cardinal, and NuVista … We highlight the names that have seen the most ‘new buyers’. Names to highlight include Spartan, Athabasca, and Peyto … where do Crew shareholders rotate into next?”
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RBC Capital Markets interesting digital intelligence strategy (description to follow) uncovered specific themes,
“The mission of Digital Intelligence Strategy is to shed light on and quantify some of the market’s most pressing and opaque questions through a data science and alternative data lens. We collaborate with RBC Elements, our in-house data science team, to design real-time tools to increase the signal to noise ratio across the most critical themes in global markets … [U.S.] consumer credit conditions continue to normalize. Our machine learning credit card delinquency nowcast is calling for the smallest increase in delinquencies for Q2′24 … Forward-looking airline search interest remains weak … our nowcast from daily scrapes of 21,000 US company job boards continues to show a material slowing in hiring … Overarching Equity Strategy Takeaway (Lori Calvasina): Overall, the latest updates from our DIS team reinforce the idea that the US consumer has been reacting in a more profound way to the pressures of higher interest rates and inflation, which may keep conditions in US equities choppy for the time being. But we also find within their work evidence supporting the idea that the consumer is managing through the current set of challenges, keeping us in the soft landing camp on the US economy for now”
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Wells Fargo analysts developed a (long) list of “stocks for all seasons”,
“Industry leading: Simply put, we value companies with high levels of market share. This can be leading share in a consolidated industry, or it can be a sizeable presence in a market that remains fragmented but in which a Company has specific competitive advantages … Balance-sheet strength: We generally favor companies that have an investment-grade credit rating. We view this as a sign that a company that can finance its operations internally in a variety of economic scenarios … Strong cash-flow generation: We evaluate a variety of measures here, including a company’s free-cash-flow (cash remaining after expenses are paid) margin, return on equity, and return on invested capital. We believe strong margins or returns are indicative of a business that possesses a defensible economic position. Consistent growth: There is a degree of variability in the importance of this factor depending on one’ s time horizon. Generally speaking we believe a quality business should possess some assortment of the following attributes: stable and predictable margin trajectory, large and growing addressable market, strong competitive position, and a rational endmarket operating environment”
The stocks are Apple Inc. Abbott Laboratories, Accenture Plc Class A, Automatic Data Processing Inc., Aflac Incorporated, Broadcom Inc., Becton Dickinson and Company, BlackRock Inc., Chubb Limited, Colgate-Palmolive Company, Comcast Corporation, CMS Energy Corporation, Cisco Systems Inc., Cintas Corporation, Chevron Corporation, Danaher Corporation, Ecolab Inc., Emerson Electric Co., Alphabet Inc., Home Depot Inc., Illinois Tool Works Inc., Johnson & Johnson, JPMorgan Chase & Co., Linde PLC, Lowe’s Companies Inc., Mastercard Incorporated, Medtronic PLC, Microsoft Corporation, NextEra Energy Inc., NIKE Inc. , Paychex Inc., PepsiCo Inc., Procter & Gamble Co, Parker-Hannifin Corporation, Starbucks Corp, SAP Global Inc., Stryker Corp., TJX Co.s Inc., Texas Instruments Inc., UnitedHealth Group Inc., Visa Inc. and Walmart Inc.
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Diversion: “This streaming service offers nothing but AI-generated music. Give it a try for free” – A Journal of Musical Things