Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Scotiabank analyst Jason Bouvier is bullish on Canadian oil companies despite the pipeline cancellations,
“We continue to believe the economy will be in much stronger shape by the summer/fall which should bode well for oil demand. In addition, the Saudi’s recent cut of 1 mmbbl/d should support the oil market in the near-term … We think [the] combination of low cost structure and capital discipline set the stage nicely for share price appreciation as oil strengthens into 2H/21… Who’s got torque to oil prices? … we show the companies with the highest FCF torque. The top names include MEG, CVE, BTE, ERF, and CPG. Refining margins also set to improve. Exhibit 6 shows our sensitivities to various crack spreads. CVE and IMO have the most leverage to higher cracks spreads.”
“@SBarlow_ROB BNS top picks in Canadian oil” – (research excerpt) Twitter
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U.S. industrial stocks have been at the forefront of the market rotation to economically sensitive stocks, as BofA Securities writes (my emphasis),
“The BofA Industrial Momentum Indicator accelerated in January to an all-time high, signaling the recovery prospects in the post COV-19 downturn. We note that Industrials are the #1 sector overweight this month on a global basis. .. The upward trajectory in the Industrial Momentum Indicator suggests a cyclical bias versus a defensive posture. Across the BofA Global team, our fundament analysts highlight Raytheon Technologies (RTX), Parker-Hannifin (PH), FedEx (FDX), and Timken (TKR).
“@SBarlow_ROB BoA: “The BofA Industrial Momentum Indicator accelerated in January to an all-time high” – (research excerpt) Twitter
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The Morgan Stanley research team published a list of their top U.S. stock picks heading in to earnings season,
“The biggest positive contributor to projected earnings growth is Health Care, which is expected to grow 7%, with that growth driven by the Life Sciences & Tools industry group. The biggest negative contributors to index-level growth are Energy, where earnings are expected to fall nearly 100%, and Industrials (where growth is pressured by the airline industry). The top-line picture looks better, with 6 sectors expecting positive growth and 5 expecting negative growth. Tech and Utilities are expected to be the biggest positive contributors while Real Estate, Energy, and Materials are expected to be the biggest negative contributors. "
The top buys include some familiar names like Apple Inc., Raymond James Financial, T-Mobile U.S. and Microsoft Co. and some less knows companies – Exelon, lamar Advertising, RingCentral, and Sensata technologies. The short ideas are Cree, Spirit AeroSystems and United Parcel Service.
“@SBarlow_ROB MS: high conviction trades into earnings season’ – (table) Twitter
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Column: “Inflation a big risk for dividend investors” – Barlow, Inside the Market
Diversion: “What Musk’s $100 million carbon capture prize could mean” – M.I.T. Technology Review (soft paywall)
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