Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Citi strategist Scott Chronert revised his list of top U.S. small and mid-cap stocks. I should point this out more often, but the mid caps, in particular, often have market caps that would put them firmly among what Canadians consider larger-cap stocks if they were in the TSX. Logitech International SA, for instance, has a market cap of US$21-billion.
Mr. Chronert has added TripAdvisor Inc. and Billtrust to the list, and removed CACI International Inc. and Mercury Systems Inc. because they are no longer covered by a Citi analyst.
Canadian Solar Inc. is among the 20 top picks. Other notable names include PulteGroup Inc., UpWork Inc., Jabil Inc., Eagle Materials Inc. and H.B. Fuller Co..
" @SBarlow_ROB Citi top 20 U.S. small and mid cap stock ideas” – (full table) Twitter
***
I always find it interesting, if not more credible, to read economic forecasts for Canada from New York-based economists. They tend to place the forecast within a global outlook, and Morgan Stanley’s Robert Rosener provided the most recent example of this on Wednesday (my emphasis),
“The Canadian economic recovery remains on robust footing – we revise up our 2021 GDP growth forecast to +6.4%Y from +5.9%Y … recovery underpinned by ongoing reopening and fiscal stimulus, which we think will position the Canadian consumer and housing to lead the recovery this year, with both sectors together contributing to more than two-thirds of the overall GDP growth that we expect in 2021. We expect growth to moderate in 2022, but stay above-trend at +4.0%Y … Our base case sees Canadian yields rising gradually in the run-up to an initial rate hike from the BoC next year .. We expect … upward pressure on Canadian yields. 2-5y yields dip into year-end 2021 in our bull case … as 10y yields remain stagnant over the coming 12 months. We recommend investors maintain long USD/CAD positions targeting 1.25 [CADUSD of $0.80] with a 1.18 stop [CADUSD 0.80] . We think global reflation is largely in the price, leaving limited room for global growth to surprise to the upside’
“@SBarlow_ROB MS: Canadian economic outlook in a global context” – (research excerpt) Twitter
***
Also from Citi, energy analyst Alastair Syme details a potential new normal for oil stocks – depressed relative valuations,
“Both the Exxon and Chevron AGMs saw shareholders call for a change in approach[this week], while in The Netherlands a court ruling said RD Shell’s climate policy was “not concrete and is full of conditions” (which is seemingly counter to the 90% of shareholders that supported the company’s policy at last week’s AGM). It is easy to see the increase in rhetoric as further evidence that the oil industry is uninvestible. And yet that would probably understate how much of this uncertainty is already factored into valuations. For the first time in history the sector is “valued” less than it “contributes” to global society (see chart below) .. while we all like to think change is around the corner, we – the citizens of the world – GREW our oil and gas consumption by 2.1% per year] 2015-19 (pre-pandemic).
“@SBarlow_ROB Citi: “Global Oil & Gas Weightings – as % of Global GDP and as % of Global Equities” – (chart) Twitter
***
Diversion: “Amazon: Overworked Warehouse Employees Can Go Reflect in the Despair Closet” – Gizmodo
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.
Scott Barlow