Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
CIBC analyst Dean Wilkinson published his monthly overview of the REIT sector,
“Consensus estimates are calling for FFO [funds from operations] per unit (excluding hotels) to be up 3.7% compared to the same quarter last year on a market cap-weighted basis. Growth is expected to be strong across the majority of the Canadian sub-sectors, notably Seniors (+68%) and Domestic Apartments (+7%), offset by declines in the Diversified space (-9%) … REITs within our coverage universe are trading at an average 21% discount to NAV (vs. a 10% historical average) and a 12.8x 2024E P/FFO multiple (vs. a 13x historical average). While the discount may seem punitive at face value, should interest rates remain elevated (but stable), we may see a modest increase in consensus cap rates beyond those which have already occurred in the past two years, which may ultimately serve to narrow the current discount and return the focus where it belongs – on real estate fundamental”
Mr. Wilkinson has “outperformer” ratings on Automotive Properties REIT, Brookfield Corporation, BSR REIT, Chartwell Retirement Residences, Crombie REIT, Dream Industrial REIT, Dream Residential REIT, European Residential REIT, First Capital REIT, Granite REIT, H&R REIT, Killam Apartment REIT, Minto Apartment REIT, Morguard North American REIT, Nexus Industrial REIT, Primaris REIT, PRO REIT, RioCan REIT and SmartCentres REIT.
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RBC Capital Markets quantitative analyst Bish Koziol published a ranking of the top domestic stocks for value, growth and momentum.
The value picks are (in order) Quebecor Inc., Cogeco Communications Inc, Magna International Inc, Canadian Western Bank, Fairfax Financial Holdings Ltd, Crescent Point Energy Corp, Rogers Communications Inc., Baytex Energy Corp, EQB Inc., Great-West Lifeco Inc, Suncor Energy Inc., Pason Systems Inc., Enerplus Corp, iA Financial Corporation Inc and Linamar Corporation.
For growth, Intact Financial Corporation, Quebecor, Inc., BRP Inc, Open Text Corp, Equitable Group Inc, Stella-Jones Inc, Altagas Ltd, Cogeco Communications Inc, TMX Group Ltd, Richelieu Hardware Ltd., Canadian Natural Resources Ltd, Enerplus Corp, Cenovus Energy Inc, and TFI International Inc.
Momentum picks are BCE Inc, CCL Industries Inc., Winpak Ltd., Fortis Inc, IGM Financial Inc., Stantec Inc., IA Financial Corporation Inc, TC Energy Corp, Waste Connections Inc, Canadian National Railway Co, TELUS Corporation, Sun Life Financial Inc, CGI Inc, Toronto-Dominion Bank and Finning International Inc.
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Citi strategist Chris Montagu notes that futures positioning shows weak commitment in the equity market bounce,
“S&P rallied on weaker-than-expected NFP numbers, and this was accompanied with new risk flows on Friday and Monday. However, the net positive increase in bullish positioning was partially offset by some long unwinds witnessed earlier in the week (Figure 1). However, we have yet to see a significant shift in futures positioning that would suggest a material change in sentiment and investors appear at best cautiously optimistic. To put this into perspective, in the week prior, over $17bn of short positions were covered, which is over double the amount of new risk flows seen this week. Generally, the lackluster bullish positioning alongside continued de-grossing seems to be more indicative of a mildly optimistic, but also cautious stance by investors”
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Diversion: “You’re Practically Guaranteed to Get Alzheimer’s If You Have This Genetic Variant” – Gizmodo