Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
RBC research’s top picks in the global energy sector were updated Tuesday with two stocks, Rattler Midstream LP and Valero Energy Corp removed. The list has performed well historically,
“The RBC Global Energy Best Ideas List was up 17.5% compared to the iShares S&P Global Energy Sector ETF (IXC) up 15.4%. Since its inception in February 2013, the RBC Global Energy Best Ideas List is up 21.3% compared to the S&P Global Energy Sector ETF down 17.4% "
The list includes 18 names. Domestic stocks included are Canadian Natural Resources Ltd., Suncor Energy Inc., Tourmaline Oil Corp., Freehold Royalties Ltd., Pembina Pipeline Corp., Parex Resources Inc., Enerflex Ltd., and Shawcor Ltd.
“@SBarlow_ROB RBC’s best ideas global energy’ – (table) Twitter
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BMO economist Robert Kavcic notes the rise in five-year government of Canada bond yields and predicts an increase in mortgage rates,
“After plumbing levels around 1.5%-to-1.7% (your mileage will vary), it looks pretty safe to say that five-year fixed rates will soon start grinding back up. Where we go is anyone’s guess, but current bond yields (if they hold) point to levels closer to 2%. And, unless there’s another significant shock to the economy coming, we could be looking at a last chance to lock in these rates for some time. Considering the narrow spread between closed variable and five-year fixed at this point, it might be a rare occasion when locking in makes sense (but that depends critically on your personal situation, of course).’
" @SBarlow_ROB BMO: Canadian mortgage rates set to move (higher)’ – (research excerpt) Twitter
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Morgan Stanley U.S. quantitative strategist Boris Lerner provided a list of American companies best positioned to outperform in a rising rate environment.
The stock screen utilizes the firm’s proprietary BEST (Biannual Equity Select Tool) quantitative method, “a multi-factor alpha model with a 24-month [time horizon]” designed to uncover outperforming stocks.
“Rising rates have historically benefited Energy, Materials, and Capital Goods industry groups. Below Trend and Rising rates periods also tend to favor Autos, Retailing, and Technology industry groups, while Above Trend and Rising rates environment is typically more supportive of Consumer Services, Food & Staples Retailing, Health Care and Financials. Since the rates are now close to their longer-term trend, we suggest investors focus on undervalued names in industry groups that tend to do well both in low and high rate regimes. "
The short-ish list of stocks includes L3harris Technologies Inc., Lockheed Martin Corp., Northrup Grumman Corp., Stanley Black & Decker Inc., Raytheon Technologies Corp., Linde PLC, Eastman Chemical Co., Ingersoll Rand Inc., Corteva Inc., Wabtec Corp., Diamondback Energy Inc., and Marathon Petroleum Corp.
“@SBarlow_ROB MS: quantitative U.S. stock picks for a rising rate environment” – (table) Twitter
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Newsletter: “When rising bond yields will pose a serious risk to stocks” – Globe Investor
Diversion: “Aston Martin: The [Canadian] billionaire building ‘a British Ferrari’’ – BBC
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