Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

Morgan Stanley analyst Jens Spiess lists Canada’s own First Quantum Minerals Ltd. among the world’s most attractive mining stocks,

“While residual concerns around Zambia exposure remain, FQM’s proactive balance sheet measures (bond refinancing, copper price hedging, covenant relaxation) as well as its solid operational momentum of late across Zambia and Panama are hard to ignore. Spot valuation remains undemanding with 2021 spot FCFY [free cash flow yield] at 14%, pointing to a risk-reward that is skewed to the upside”

Story continues below advertisement

The other picks are KAZ Minerals PLC, China Molybdenum, Glencore PLC, Freeport-McMoRan Inc, Grupo Mexico S.A.B. de C.V. and Polyus Gold.

“@SBarlow_ROB MS lists Canada’s First Quantum Minerals among the world’s most attractive mining stocks” – (research excerpt) Twitter

***

Goldman Sachs U.S. equity strategist David Kostin is concerned about the pandemic-caused deterioration in corporate profitability (as measured by return on equity) and provides stock picks to protect investors from further damage,

“The S&P 500 has returned 4% YTD, driven entirely by valuation expansion. While the FY2 [two-year forward] P/E multiple has expanded from 16x at the start of the year to 20x today, company fundamentals have collapsed. Trailing 4-quarter S&P 500 return on equity (ROE) dropped by 150 bp to 14.9% in 2Q 2020 vs. 1Q 2020 and now ranks in the 45thpercentile vs. the past 40 years. ROE declined by nearly 600 bp in Industrials, Discretionary, and Energy. However, investors remain focused on the profitability outlook for 2021. We expect a sharp rebound in S&P 500 net profit margins in 2021, but tax reform remains a key risk. We rebalance our ROE Growth basket (GSTHGROE) of stocks with the highest expected NTM ROE growth.”

The ROE growth basket is huge, so I tried to pick out a few names that might be more interesting for Canadian investors. These are Facebook Inc., Nike Inc., Coca-Cola Co., American Express, Dow Inc., Zimmer Biomet Holdings, FedEx Corp., Corning Inc., Visa Inc., and Micron Technology Inc.

“@SBarlow_ROB GS’s Kostin concerned about ROE deterioration” – (research excerpt) Twitter

Story continues below advertisement

“@SBarlow_ROB GS’s ROE growth basket” – (table) Twitter

***

With U.S. President Donald Trump falling in the polls, JP Morgan strategist John Normand finds markets “unevenly prepared” for a Democratic sweep of the White House and Congress,

"A flip in White House Control usually comes with a flip in Congressional control; and a Democratic sweep is the only scenario likely to deliver meaningful fiscal stimulus over the short and long term. Markets appear unevenly prepared for this outcome based on positioning and valuation measures covering the most impacted markets like US curve steepeners, inflation breakevens, Gold, Materials & Healthcare Equities and China Equities, Bonds & FX. ... Democratic sweep is the only election scenario guaranteed to address the short term issue of the fiscal cliff … If Biden is true to his platform that envisions roughly $3trn of tax hikes and $5trn of spending increases over ten years, then current concerns about fiscal drag should quickly morph into discussions about fiscal thrust and its implications for inflation, corporate earnings and asset prices. "

"@SBarlow_ROB JPM: “If Biden is true to his platform that envisions roughly $3trn of tax hikes and $5trn of spending increases over ten years, then current concerns about fiscal drag should quickly morph into discussions about fiscal thrust and ... inflation, corp earnings and asset prices"” – (research excerpt) Twitter

***

Story continues below advertisement

Newsletter: “Life is weird but markets are actually acting normal” – Globe Investor

Diversion: “Led Zeppelin emerges victor in ‘Stairway to Heaven’ plagiarism case” – Reuters

Tweet of the day:

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies