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Globe Investor Top analysts’ stock picks, four quality mutual funds and the Canadian bank short sellers love: What you need to know in investing this week

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.



The 10 top-performing Canadian equity analysts – and their stock picks for 2019

With thousands of analyst recommendations published every day, the key question for investors is: how do you know who to trust? TipRanks is a website that tracks and ranks analyst recommendations. Investors can skip recommendations from underperforming analysts, and focus exclusively on best-performing analysts with a proven track record of success. Here is TipRanks’ list of the top 10 Canadian analysts, and their top “buy” recommendations for 2019. Some are well known names, such as Air Canada, and others less so, such as medical cannabis producer OrganiGram Holdings. And if you’re keeping track, four out the 10 work for RBC Dominion Securities.

Check out: John Heinzl’s model dividend growth portfolio as of Feb. 28, 2019

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Gordon Pape: Don’t ignore mutual funds yet. Here are four quality options I like right now

We don’t hear a lot of talk about mutual funds these days, Gordon Pape writes. The critics say it’s an outdated industry, plagued with expensive fees, underperforming products and high-pressure sales tactics. ETFs are the future, offering low costs, liquidity and transparency. But here are four mutual funds that he likes right now. All offer stability and above-average performance. Yes, the fees are higher than those of ETFs. But in these cases, you’re getting the quality you’re paying for.

Read Rob Carrick: Parents financially supporting thirtysomething kids? It’s happening

Short sellers love this Canadian bank. Don’t bet against them

Laurentian Bank of Canada is a small bank but a big target for short-sellers, who are convinced that a downturn in the Canadian housing market will deliver severe pain. Now may not be the best time to bet against these naysayers, David Berman writes. The Montreal-based bank, whose operations are largely confined to Quebec, delivered its fiscal first-quarter results on Wednesday. And while the results of its Big Bank peers have hardly been stellar, Laurentian’s were abysmal. Short-sellers, who bet that stock prices will decline, would have profited handsomely from the bad news: Laurentian’s share price fell 9.8 per cent on Wednesday after the bank released its results. What distinguishes Laurentian and, to a lesser extent, CIBC? Housing exposure.

Read more: These Canadian banks raised their dividends this past week, joining RBC, which announced its hike earlier: TD, CIBC and Bank of Nova Scotia

Related: Laurentian, Gap and more of this week’s investing stars and dogs

Why Canada’s oldest and largest ETF is bleeding assets

The granddaddy of Canadian exchange-traded funds is showing its age, Tim Shufelt writes. The iShares S&P/TSX 60 Index ETF – the oldest ETF in the world and the largest in Canada – has been bleeding assets as domestic investors move to cheaper alternatives and foreign investors turn away from Canada. Once the only game in town for low-cost, one-stop, diversified exposure to the Canadian stock market, XIU is steadily losing market share as fees on newer ETFs shrink toward zero. The ETF was hit with its first wave of redemptions starting in 2014, which coincided with a severe global oversupply of crude oil and steep losses in energy prices. In mid-2017, the outflows resumed, and haven’t really stopped since.

Read more: Rob Carrick’s 2019 ETF Buyer’s Guide: Best U.S. equity funds

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Canada’s oldest company may soon be out of the S&P/TSX Composite Index

When the broadest index of Canada’s biggest stocks changes its membership this month, there may no longer be room for Canada’s oldest company, David Milstead writes. Three emerging cannabis sellers may join the club, however. The S&P/TSX Composite Index is poised to do a “reconstitution,” a process it does every quarter to remove companies that have become too small and add companies that have grown in value. And Hudson’s Bay, because of its shrinking share price, is now small enough to lose its spot. Potential new composite members include pot stocks HEXO, CannTrust Holdings and Green Organic Dutchman Holdings, which would double the number of cannabis companies in the 239-member composite.

Read more: Why the Bank of Canada could keep rates lower for longer

In and out: Potential changes to the S&P/TSX Composite

TickerNameSectorLast PriceWeight
Potential Additions:
HEXO-THEXOHealth Care$7.480.0608%
PDL-TNorth American PalladiumMaterials$19.950.0503%
DIR.UN-TDream Industrial REITReal Estate$11.000.0490%
AFN-TAg Growth InternationalIndustrials$57.760.0442%
TRST-TCannTrust HoldingsHealth Care$11.790.0431%
NWH.UN-TNorthWest Healthcare Properties REITReal Estate$10.750.0424%
SMU.UN-TSummit Industrial Income REITReal Estate$11.000.0422%
CJT-TCargojetIndustrials$83.690.0414%
ERO-TERO CopperMaterials$16.100.0407%
TGOD-TGreen Organic Dutchman HoldingsHealth Care$3.830.0380%
Potential Deletions:
SW-TSierra WirelessInformation Technology$16.960.0260%
UNS-TUni-SelectConsumer Discretionary$12.780.0231%
HBC-THudson's BayConsumer Discretionary$8.090.0228%
LUC-TLucara DiamondMaterials$1.630.0215%
CMG-TComputer Modelling GroupEnergy$6.130.0201%

Source: Capital IQ; Bloomberg; AltaCorp Capital Inc.

What investors need to know for the week ahead

The Bank of Canada will be in the spotlight in the week ahead when it make its interest rate policy announcement on Wednesday. Observers are expecting no change, but will be looking for clues on future direction after disappointing growth figures on Friday. Economic data coming this week include U.S. new home sales for December (Tuesday), Canadian and U.S. trade figures (Wednesday), China’s trade surplus (Thursday), Canadian employment for February, as well as Canadian and U.S. housing starts, for February and January, respectively (Friday). Companies releasing financial results include: Aecon Group, Great Canadian Gaming, Recipe Unlimited (formerly Cara), Descartes Systems, Dorel Industries and Dell.

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