Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Credit Suisse quantitative strategist Patrick Palfrey believes economically sensitive stocks are set to outperform, and provided a list of U.S. Best [Stock] Ideas for an Accelerating Economy,
“Despite [a] more difficult environment, the market rotated pro-cyclically, with Cyclicality, Value, and Small-Caps outperforming. This shift in leadership was the result of Fed Chair Powell’s taper guidance during his September 22 press conference … We believe the backdrop remains quite favorable for cyclically oriented stocks. Depleted inventories will eventually need to be replenished, leading to robust industrial activity. Earnings forecasts have broadly improved, with Cyclicals experiencing the strongest revenue and margin revisions for both 2021-22. Further, any additional forward momentum in yields should further support.”
The list of stock picks is big at 60 members. Companies more likely to be of interest to Canadian investors include Parker-Hannifin Corp., Royal Caribbean Cruises Ltd., Marriott Vacations Worldwide Corp., Estee Lauder Companies Inc., Bunge Ltd., Align Technology Inc., Micron Technology Inc., Square Inc., Applied Materials Inc., Alphabet Inc., Walt Disney Co., and Facebook Inc..
“@SBarlow_ROB CS: “Best U.S. ideas for an accelerating economy” - (full table) Twitter
BofA Securities U.S. quantitative strategist Savita Subramanian made some changes to her top 10 stock picks for growth and value,
“EPS Surprise Model rating fell below 5 for Allstate Corp. (ALL); Marathon Petroleum Corp. (MPC) and Principal Financial (PFG). They will be replaced by Amgen Inc. (AMGN); Huntington Bancshares Incorporated (HBAN) and American International Group (AIG)”
The growth list now includes Amazon.com Inc., Facebook Inc., Alphabet Inc., Marriott International Inc., Netflix Inc., NRG Energy Inc., T-Mobile U.S. Inc., Twitter Inc., Vertex Pharmaceuticals and West Pharmaceuticals.
The value list is American International Group Inc., Amgen Inc., Huntington Bancshares Inc., Laboratory Corp of America Holdings, Lockheed Martin Corp., Morgan Stanley, M&T Bank Corp., NRG Energy Inc., PNC Financial Services Group Inc., and T-Mobil U.S. Inc.
“@SBarlow_ROB BofA: Top U.S. stock picks for growth and value” – (tables) Twitter
" @SBarlow_ROB BofA’s stock selection method for top growth and value picks” – (research excerpt) Twitter
Goldman Sachs strategist David Kostin published an interesting chart showing the sector makeup of the S&P 500 over time,
“At the height of the Tech Bubble, Info Tech represented 33% of S&P 500 equity capitalization. By 2002, it had fallen to 13%. Over one year ago, for the first time since the Tech Bubble, Info Tech represented more than a quarter of S&P 500 equity capitalization at 27%. Its share of the index increased through 3Q 2021. Change over time reflects both evolving industry fundamentals and the shifting composition of the S&P 500 Index constituents … At the peak of the Tech Bubble, Information Technology never generated more than 14% of the S&P 500′s earnings. The profit contribution from Info Tech increased over the past few years and the sector now accounts for 21% of S&P 500 net income. Taken together, the 3 largest sectors by equity capitalization represent 42% of S&P 500 net income.”
“@SBarlow_ROB GS: “Sector composition of the S&P 500 by equity capitalization, 1975-2021″ – (chart) Twitter
Diversion: “Fatty Arbuckle and the Birth of the Celebrity Scandal” – New Yorker
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