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Scott Barlow offers five thoughts on the research, analysis and ephemera that’s crossed his desk this week.

1) Dissenting views on the copper price and related miner stock prices arose this week. On the bullish side, Jefferies analyst Christopher LaFemina estimated that Freeport McMoRan Inc., FCX-N Canada’s First Quantum Minerals Ltd. FM-T and Antofagasta PLC ANFGF have stock prices reflecting a copper price of US$3.86 a pound. Jefferies predicts an average copper price of US$5.25 for the 2023-2030 period, thanks to the global electrification trend, and this implies substantial upside for related mining stocks.

Meanwhile, Citi analyst Maximilian Layton lowered his three-month copper price forecast to US$3.63 from US$3.86, citing fading global manufacturing data. Mr. Layton prefers silver miners.

A lot of the discrepancy here is timing. Citi is bullish on copper in the midterm, predicting a 2025 commodity price of US$5.67.

2) Markets were generally rangebound in April. Goldman Sachs chief U.S. equity strategist David Kostin helped explain the lack of market direction by noting that there are both upside and downside risks to his prediction of a flat S&P 500 for 2023. On the plus side, first-quarter earnings have come in much better than feared, the Federal Reserve might now be done raising interest rates and share buybacks are set to return. Downside risk arises from the U.S. debt ceiling deadline and a lack of market breadth that implies fragility. Recession, obviously, is a clear downside risk for U.S. equities.

3) BofA Securities quantitative strategist Savita Subramanian did a deep analytical dive into the U.S. health care sector, one of my two favourite long-term investment themes (along with cloud computing). The sector outperformed the S&P 500 benchmark by 16 percentage points in 2022 but has trailed by 8.5 per cent in 2023.

Reasons to own health care stocks include their defensive nature, strong earnings growth, outperformance during market downturns, a higher proportion of earnings beats relative to the broader market for 21 straight quarters, and valuations lower than the S&P 500. The main reason to underweight health care is that the sector is overweighted by active fund managers and the potential for lower government spending on the sector.

The report included top ideas from BofA analysts, which include Eli Lilly, Vertex Pharmaceuticals, Thermo-Fisher Scientific and McKesson Corp.

4) Scotiabank strategist Jean-Michel Gauthier recommended three trades as part of a monthly review of the firm’s quantitatively driven SQoRE Top 30 model portfolio. Intact Financial IFC-T was replaced by Manulife Financial MFC-T after the former experienced a “sustained slowdown in earnings revisions.” Manulife is Scotia financial analyst Meny Grauman’s Focus Pick for 2023.

Mr. Gauthier also recommended taking profits on Teck Resources TECK-B-T after a strong run higher. Trade idea No. 3 is to buy CGI after the company beat consensus profit forecasts.

5.) The Financial Times’ Alphaville site published a piece called “Lithium’s shale oil moment,” describing a new technique making lithium recovery easier. A process called direct lithium extraction implements a brine that increases the yield from 40 to 60 per cent previously to 70 to 90 per cent.

The new technique increases the profitability of existing projects and might, by alleviating global lithium supply concerns, have a suppressing effect on the commodity price

Follow Scott Barlow on Twitter: @SBarlow_ROBOpens in a new window

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