Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Formerly bullish strategist Jonathan Golub from Credit Suisse reiterated an S&P 500 target only 2.5 per cent ahead of current levels because of the worst earnings season since the financial crisis,
“4Q EPS grew -2.4%, on +5.9% revenues, +1.9% buybacks, and a -10.2% contraction in margins. EPS topped estimates by just 1.2%, versus a long-term average of 4.8%. Ex-TECH+, EPS grew a more robust +5.7%. EPS growth for EAFE expanded +8.5%. Reiterating 4050 S&P 500 Target on Weaker Earnings. We are lowering our 2023-24 EPS forecasts from $215 and $230 to $210 and $215 on margin pressures. This compares to $220 for 2022. Multiples should flatline as persistently high inflation, tighter monetary policy and sub-par economic growth offset declining recession risk.”
“CS: “worst earnings seasons since the financial crisis”” – (research excerpt) Twitter
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Scotiabank strategist Jean-Michel Gauthier provided some valuable insight while updating the firm’s quantitatively driven top 30 stock list,
“The quant junk rally petered out in February, giving the edge to Quality. Still, deteriorating prospects for Energy (heavy in Growth/Momentum lists) hurt those styles. Momentum has been lagging since October due to several reversals. Slower Pace of Macro Deterioration Makes Fundamentals Relevant Again as “Growth” Advantage Shifting Away from Resources Towards Cyclicals Ex-Tech. Lower volatility in macro data leads our SQoRE model to put less emphasis on high frequency/high volatility Momentum metrics. Cyclicals ex-Tech have taken EPS revisions leadership away from Energy.”
BRP Inc. replaced Empire Co. Ltd. this month. The other stocks on the list are Enerplus, Advantage Energy, Tourmaline Oil, MEG Energy, Birchcliff Energy, Crescent Point Energy, Whitecap Resources, Stelco Holdings, Teck Resources, Torex Gold Resources, IAMGOLD, Stella-Jones, Winpak, Mullen Group, TFI, Russell Metals, Exchange, Finning, Boyd Group Services, Uni-Select, Dollarama, Alimentation Couche-Tard, Loblaw Co., George Weston, Element Fleet Management, Fairfax Financial, Intact Financial, Celestica and Capital Power.
“Scotia top 30 Canadian stock picks” – (table) Twitter
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BofA Securities U.S. quantitative strategist Savita Subramanian made a number of changes to her list of high quality, dividend paying equity list. Automatic Data has been added while Quest Diagnostics, Genuine Parts, Honeywell and Johnson and Johnson were removed. This leaves a very tight list of Automatic Data, General Dynamics, Procter & gamble, Paychex, Packaging Corp. and Texas Instruments.
“BofA’s high quality dividend screen of U.S. stocks” – (table) Twitter
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Diversion: “Winners of the 2022 World Nature Photography Awards” – The Atlantic
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