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

Citi strategist AlexanderHacking lists Canadian stocks among his top picks in North American mining,

“Citi are structural bulls on copper, aluminum and steel based on a confluence of trends including China production controls, electrification/de-carbonization trends and higher steel metallics costs. That said, the world’s largest economies are all facing growth headwinds in 2022 … Catalysts/themes may include: Copper & resource nationalism (risks temporarily abating?), Battery supply chain integration (M&A re-rating?); US scrap prices (BF re-rating?); China steel cuts meet property recovery in 2H22 (price spikes & more export controls?); US mid-term elections (negative green metals?) … Key stock picks aligned with our metals forecasts are TECK [Teck Resources Ltd (B)], AA [Alcoa Corp.], FM [First Quantum Minerals Ltd.] and STLD [Steel Dynamics Inc.] in N. America; and CBA and GGBR in LatAm. These stocks offer an attractive combination of commodity exposure, company catalysts, growth and FCF [free cash flow], in our view.”

“Canadian stocks among Citi’s top picks in Americas mining sector” – (research excerpt) Twitter

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Credit Suisse analyst Andrew Kuske sees value in the yield-heavy Canadian renewable power sector,

“We reiterate our Outperform ratings on Brookfield Renewable Power LP (BEP), Innergex Renewable Energy Inc. (INE) and Northland Power Inc. (NPI) in the core pure play renewable stocks along with identical ratings on the Alberta incumbents: Capital Power Corporation (CPX) and TransAlta Corporation (TA). Simply, we view BEP as one of the best in class globally focused renewable players with a unique business and funding model – partly owing to the relationship with Brookfield Asset Management (BAM). Both INE and NPI offer interesting value propositions in our view after a series of real or perceived strategic missteps or weak execution. Overall, we continue to believe that Alberta’s power market provides a unique set-up – albeit somewhat time limited given the reality of higher power prices and carbon pricing will attract incremental capacity. Beyond the Alberta power market, a number of the Canadian renewable stocks offer rather unique positioning and platforms with BEP probably being the most distinct. This note includes estimate changes for BLX, BEP, INE, NPI, TA and RNW along with a target price change for NPI from C$52 to C$50. There are no ratings changes.”

“CS top picks in Canadian renewable power sector” – (research excerpt) Twitter

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BMO chief strategist Brian Belski outlines his forecast for Canadian equities in 2022, and notes favoured sectors,

“Although this sharp recovery is unlikely to be matched in 2022, we believe Canadian equities can still approach double-digit growth in 2022. In fact, we forecast that the S&P/TSX will rise 16% (from current levels) and reach 24,000 by 2022 year-end, which marks another new all-time high. Our expectation is based on the assumptions of a more normalized cost-of-equity (DDM model) and a market multiple (PE model) that is in line with historical average. Overall, our 2022 outlook assumes a return to normalcy and a transition to a more earnings-driven environment, which is likely to see greater bouts of volatility”

Mr. Belski recommends overweight positions in Consumer discretionary stocks (Aritzia Inc., Canadian Tire Corp., Dollarama Inc., BRP Inc., Restaurant Brands International Inc., Sleep Country Canada Holdings Inc. ), Financials with more U.S. exposure (Toronto-Dominion Bank, Royal Bank of Canada, Canadian Imperial Bank of Commerce, Manulife Financial Corp. and Sun Life Financial Inc.) Industrials (Canadian National Railway Co., Thomson Reuters Corp., Waste Connections Inc.), and Materials (West Fraser Timber Co. Ltd., Nutrien Ltd).

“BMO’s top Canadian sectors and stock picks for 2022″ – (table) Twitter

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Newsletter: “Why the index is not the stock market” – Globe Investor

Diversion: “Spy agency warned Trudeau China’s tactics becoming more ‘sophisticated ... insidious’” – CBC

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