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

CIBC real estate analyst Dean Wilkinson thinks it’s time for investors to be more selective in the REIT sector,

“The exceptionally strong recovery in the REIT sector this year has continued unabated, with the complex delivering positive returns for yet another month. The 26% year-to-date total unweighted return (for the sector) is now flirting with the upper end of our 10%-30% total return outlook for the year, and we believe that clocking a 30%+ return for the sector by the end of the year is increasingly likely. With that said, we believe that the dynamics for a successful investment within the space have generally changed; a rising tide has indeed lifted all boats (all REITs under our coverage have delivered, for the most part, material, positive returns this year), and a more active approach to REIT selection at this time may be warranted (note that the sector is now trading just below NAV, which is roughly in line with the historical average). On a REIT-specific basis, our top picks include CRR [Crombie REIT] ,GRT[Granite REIT], BSR [BSR REIT], TCN [Tricon Capital Group Inc.] and KMP[Killam Apartment REIT] within the safety trade and AP [Allied Properties REIT], REI Riocan REIT], FCR [First Capital REIT] , and SRU [Smartcentres REIT] within the recovery trade.”

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“@SBarlow_ROB CIBC: Time to get more selective in REIT sector” – (research excerpt) Twitter

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Goldman Sachs’s influential chief U.S. equity strategist David Kostin jacked his 2021 S&P 500 target by 11 per cent on Thursday,

“Our new S&P 500 year-end 2021 price target is 4700 (previously 4300), representing 7% upside from current levels. Our year-end 2022 target is 4900 (previously 4600), 11% above the current level… We raise our EPS estimates to $207 (from $193) in 2021 and $212 (from $202) in 2022. These represent annual growth of 45% and 2% … we expect stronger revenue growth and more pre-tax profit margin expansion as firms successfully manage costs and as high-margin Tech companies become a larger share of the index… Lower interest rates than expected support a stable forward P/E multiple of 22x … Flows: Corporates and households will be the largest buyers of US equities. Share buyback announcements have totaled $683 billion YTD, the second largest total on record at this point in the calendar year. US money market funds have AUM of $5.4 trillion, more than $1 trillion above balances at the start of 2020″

“@SBarlow_ROB GS’s Kostin jacks 2021 S&P 500 target by 11%” – (research excerpt) Twitter

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It’s usually not hard to find the top performers in an equity index but, because their performance is market capitalization-weighted, it’s often more difficult to know which stocks are having the biggest influence on the benchmark.

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RBC Bish Kozio helped us out in a Wednesday report calculating the biggest contributors and detractors from S&P/TSX Composite year to date returns,

“The S&P/TSX Composite added 122 points in July. As a result the benchmark has risen 2,854 points YTD.  Materials was the largest sector contributing to the increase with a 70-point gain. Energy was the largest drag with a negative 134 point contribution.  Shopify continues to be the largest individual point contributor to the index, adding 338 points YTD. Barrick Gold Corp. became the largest negative contributor YTD with a 18-point decrease.”

The biggest five contributors to the benchmark so far in 2021 are Shopify Inc., Royal Bank, TD Bank, Brookfield Asset Management inc. and Enbridge Inc. Largest detractors are Barrick Gold Corp., Ballard Power Systems Inc., Canadian National Railways , Agnico Eagle Mines Ltd. and B2Gold Corp.

“@SBarlow_ROB RBC: “2021 YTD – Top and 15 S&P/TSX Composite Stocks by Contribution”” – (full table) Twitter

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Newsletter: Citi’s usefully bearish outlook – Globe Investor

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Diversion: “The Myth of the Golden Years” – The Atlantic

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