Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Scotiabank analyst Himanshu Gupta updated clients on senior housing sector, where he recommends an overweight position within real estate,
“We remain overweight on Seniors Housing sector due to compelling demand-supply fundamentals, and leading FFOPU [funds from operations per unit] growth across real estate asset classes. Despite the outperformance YTD, valuation is still reasonable once we look at full NOI [net operating income] potential … Demand remains robust due to favourable demographic trends: As per StatsCan, 80+ population is expected to grow at a CAGR of 4.6% in the next 5 years, 4.7% in the next 10 years and 4.4% in the last 20 years. So, fair bit of demographic dividend over a long period of time … wing to muted supply in the next three years and continued aging population. C&W [Cushman & Wakefield] expects occupancy to surpass pre-pandemic levels in 2025 (Exhibit 1) and then move towards 95% in the following years. Montreal and Quebec market occupancies approaching 93%+ while Ontario is still lagging with Toronto at ~89% and Ottawa still at ~80% level. In Western Canada, Calgary is lagging at ~85% market occupancy while other markets (Vancouver, Victoria, Edmonton) are at or above 90% … Elevated cost of construction is the biggest roadblock to new supply … Rent growth showed further improvement in 2024 and moving towards 5% annual growth rate”
The analyst has buy ratings on Chartwell Retirement Residences and Sierra Senior Living Inc.
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RBC Capital Markets analysts created a global financial services top stock ideas report that included Brookfield Asset Management Ltd., Manulife Financial Corp. and Toronto Dominion Bank,
“BAM noted its aim to double its fee-bearing capital to $1.1 trillion by 2029 through various fundraising channels, and a broad range of investment strategies and product offerings. The company expects an increase in fee-bearing capital across all of its business groups (e.g., Renewable Power & Transition, Infrastructure, Real Estate, Private Equity, and Credit) …private Equity, and Credit). • Asset-light private equity/alternatives manager: BAM has almost no principal investments, making it one of, if not the most asset light, within BAM’s peer group … MFC closed its agreement with Global Atlantic to reinsure part of MFC’s U.S. LTC block, which reduced MFC’s LTC reserves by 14% to $36.5 billion … We believe this transaction may mark the start of more deals from MFC to further reduce its LTC exposure and validate that MFC’s LTC exposure is less toxic than believed by investors. We believe this transaction should lead to improved valuation over time … We believe TD may be nearing the first stage of resolution around its AML issues – the bank suggested that a global resolution will be reached by the end of the calendar year, which could include both monetary and non-monetary penalties … TD’s current valuations may be reflecting too much pessimism on its earnings power and capital, in our view. We see upsides to valuations once AML issues are resolved without “hard” asset caps imposed on the bank”
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BofA Securities’ prominent commodity and derivative strategist Francisco Blanch published Energy is a Bear Trap over the weekend,
“Sentiment among energy investors has turned decisively bearish as OPEC+ now plans to add barrels into a surplus oil market. Speculative net positioning in total petroleum futures and options recently dropped to the lowest levels since at least 2011, suggesting investors are already more than positioned for a falling energy price environment. Signs of weak China oil demand have compounded investor concerns … if global GDP grows by 3.3% next year as our Economics team expects, energy demand will follow. The world consumes about 300mn boe/d including renewables, and use may grow YoY by 6 to 9mn boe/d per annum going forward … With demand for electrons outpacing the use of transport fuels due to rising EV sales and the build out in data centers, thermal fuel prices should see strong support … We estimate that renewables will add 2mn boe/d in 2025, leaving oil, coal, and natural gas to add the remaining heat the world economy needs … $60/bbl or $10/MMBtu may be a soft price floor to our central Brent oil price forecast of $75/bbl for 2025, should some downside risks materialise. On the other hand, geopolitics, rapid declines in Fed rates, and China stimulus remain key upside risks to oil prices in 2025.
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Diversion: “How Do People Actually ‘Die From Old Age’?” – Gizmodo