Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
RBC Capital Markets analyst Bish Koziol made two changes to the firm’s Top 40 stock list derived from value, momentum, growth and predictability criteria. National Bank of Canada was added, North West Company was removed,
“Our Canada Overall Top 40 Portfolio gained 4.8 % last month, while the S&P / TSX Composite rose 5.9 %. Year -to -date the Portfolio advanced 14.3 % versus the benchmark ‘s 12.3 %. All sectors contributed to the return last month but were led by Communication Services. With the addition of National Bank this month, the weight of Financials in the portfolio rose to 30 %”
The list in now Imperial Oil Ltd., Pason Systems Inc., Cenovus Energy Inc, Canadian Natural Resources Ltd, Trican Well Service Ltd, Suncor Energy Inc., Ovintiv Inc, Keyera Corp, Stella-Jones Inc, Alamos Gold Inc, Labrador Iron Ore Royalty Corp, Teck Resources Ltd, CCL Industries Inc., Exchange Income Corporation, Finning International Inc., Richelieu Hardware Ltd., TFI International Inc, Toromont Industries Ltd, Linamar Corp, Metro Inc., Loblaw Companies Ltd, Fairfax Financial Holdings Ltd, AGF Management Limited, Intact Financial Corporation, National Bank Of Canada, CIBC, Bank Of Montreal, Bank of Nova Scotia, Great-West Lifeco Inc, IA Financial Corporation Inc, TMX Group Ltd, Toronto-Dominion Bank, Open Text Corp, Celestica Inc, Enghouse Systems Limited, Cogeco Communications Inc, Quebecor Inc., Rogers Communications Inc. and TransAlta Corporation.
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Citi global strategist Chris Montagu does not sound confident about U.S. large caps or the U.S. economy,
“Volatility jumped in July through early August as investor sentiment shifted dramatically from euphoric to cautious then outright defensive late last week. Small-cap and Value outperformed most styles in July but reversed last week. The heightened recession risk reflected in our economists’ expectation of 50 bps Fed rate cuts in September and November is the biggest headwind for the nascent small-cap rally. However, continued negative surprises coupled with crowded positioning among mega-cap names do not bode well for the Technology sector and Price Momentum factor. We continue to advise investors to actively mitigate unintended macro risks and diversify across sectors and stocks”.
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BMO chief investment strategist Brian Belski retains his belief in a ‘broad and significant catch-up trade’ for domestic equities,
“The equity “rotation trade” was on full display in July, with the S&P/TSX gaining a solid 5.6% in July, sharply outperforming the S&P 500 which was up just 1.1% as mega-cap momentum waned. From our perspective, this is the type of performance trends we expect to unfold in the second half of the year and into 2025 ... Interestingly, the market rotated heavily into the Real Estate sector in July, which we flagged last month as the most oversold and deepest value sector in the TSX. Indeed, the Real Estate sector was the top-performing sector in July, gaining a solid 10.6% on a price return basis. To be clear, we expect this rotation trade to favour many of these oversold areas of the TSX, including areas like Communication Services, Utilities and Financials. Overall, we remain steadfast in our view that Canada remains the contrarian call in terms of developed markets in 2024 and is well positioned for a broad and significant catch-up trade. As the reality of a more resilient economy (for both Canada and the US), coupled with increasingly stable and lower interest rates become clear in the second half of 2024, we believe fundamentals will begin to rebound faster than currently expected”
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Diversion: “Path to precision: Targeted cancer drugs go from table to trials to bedside” – Ars Technica