Looking for investing ideas? Here’s your weekly digest of the Globe’s latest insights and analysis from the pros, stock tips, portfolio strategies plus what investors need to know for the week ahead.
Gordon Pape: With signs of recovery emerging for REITs after a rough 2020, these three are worth attention
It’s been a bad year for real estate investment trusts, Gordon Pape writes. The pandemic hit the industry hard, with those specializing in malls, office buildings and hotels taking the brunt of the impact. But a recovery is under way. The S&P/TSX Capped REIT Index was down 14.7 per cent for 2020 as of Dec. 4. But the latest quarter shows the sector up 14.4 per cent in that period. REITs are staging a comeback and income investors should pay attention while there are still bargains to be found. NorthWest Healthcare Properties REIT, Minto Apartment REIT and Granite REIT and are three to check if you want to add some high-quality real estate to your portfolio. Here’s why.
Rob Carrick: A new option for safely parking U.S. dollars and a 2.3% TFSA savings account
There’s new competition to offer a U.S.-dollar option to Canadians who want to safely park money and earn a modest return, Rob Carrick writes. Make that very modest. The new U.S.-dollar guaranteed investment certificates available from Equitable Bank and sold through advisers pay 0.6 per cent for a one-year term, 0.75 per cent for two years, 0.8 per cent for three years, 0.9 per cent for four years and 1.2 per cent for five years. As of Dec. 7, Ratehub.ca showed one-year U.S.-dollar GICs from other issuers at rates of 0.1 to 0.35 per cent, and five-year deposits at 0.5 per cent to 1.5 per cent. Read more here about it and EQ’s high-interest TFSA offering.
More from Rob Carrick: Taking CPP early can cost you $100,000 and limit your long-term options
The ‘absurdly wide’ valuation spread between value and growth stocks holds lots of opportunity
Smart investors should start betting against a bubble in growth stocks, according to a widely followed money management group, Ian McGugan writes. To that end, GMO LLC, the Boston-based investment company founded by famed contrarian Jeremy Grantham, has launched the new Equity Dislocation Strategy fund. It aims to take advantage of what GMO calls an “absurdly wide” spread in valuation between value stocks and growth stocks by shorting or selling overvalued ones and loading up on their cheaper counterparts.
While the new fund is aimed at deep-pocketed institutional investors, Canadian households may want to pay attention to the thinking behind it, given GMO’s track record of spotting market bubbles before they pop. Read more here.
BMO’s Brian Belski: Next year could be one of the best for earnings growth - and stocks are poised to benefit
Yes, valuations appear stretched at first glance, writes Brian Belski, chief investment strategist of BMO Capital Markets. But they also need to be considered within the context of historically low interest rates and little inflation, ingredients that are likely to persist throughout 2021 and beyond, in our view. When viewed through this lens, we believe it is not unreasonable for market valuation to sustain (or even expand slightly from) current levels. Thus, we forecast that the S&P 500 will reach 4,200 by 2021 year-end.
In addition, we believe corporate earnings growth is poised to recover sharply from pandemic lows, particularly during the second half of next year, since we believe much of the damage was lockdown-specific and not necessarily related to companies themselves. Read more here.
Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up here.
John Heinzl: TFSAs, tax-loss selling and tallying DRIP purchases
A reader writes: To take advantage of lower stock prices that may occur because of the tax-loss selling season, I would like to purchase a stock in my tax-free savings account on Dec. 30 or Dec. 31. Then, on Jan. 1, I would make my annual TFSA contribution of $6,000 to pay for the trade in time for the settlement date, two business days after the purchase. Is this possible?
John Heinzl responds: I doubt your broker will let you buy a stock before there is sufficient cash in your TFSA. But there’s an easy workaround: Purchase the stock in your non-registered account now. Then, after Jan. 1, call your broker and contribute the stock in-kind to your TFSA. The fair market value of the shares at the time of the transfer will be your TFSA contribution. Be aware, however, that if you buy $6,000 worth of shares they could appreciate and exceed your TFSA limit by the time you transfer them. Read more here, including answers to other reader questions.
More from John Heinzl: Walt Disney, Lowe’s and more investing stars and dogs for the week
What investors need to know for the week ahead
In the week ahead, Canada’s inflation figures for October will be released on Wednesday. Other economic data on tap include: Canadian new motor vehicle sales for October (Monday); Canadian housing starts, existing home sales and average prices plus MLS Home Price Index for November (Tuesday); Canada’s wholesale trade and international securities transactions for October, plus U.S. retail sales for November (Wednesday); U.S. housing starts and building permits for November (Thursday); Canada’s retail sales for October and new housing price index for November (Friday).
Companies releasing their latest earnings in the week ahead include Nike, BlackBerry, FedEx, Accenture, Carnival and General Mills.
Looking for more investing ideas and opinions?
- CIBC’s top stock picks in favoured sectors for 2021
- Analysts expect this depressed large-cap dividend stock to rebound 25% in 2021
- Short sales on the TSX: What bearish investors are betting against
- A stock with a unanimous buy call that analysts expect to hit a record high in 2021
- Scotia strategist sees 24% upside for Canadian bank stocks
- The week’s most oversold and overbought stocks on the TSX
- Goldman Sachs is bullish on these Canadian energy stocks
- The highest yielding stocks on the TSX, plus risk data