Daily roundup of reserch and analysis from The Globe and Mail’s market strategist Scott Barlow
BMO economist Sal Guatieri finds evidence that businesses are investing in technology to limit the need for workers,
“U.S. consumers and home buyers have downshifted from their earlier blistering pace, but businesses show only the slightest hint of slowing according to the June data on capital goods orders excluding lumpy defense and aircraft items (see chart). In fact, the “control” measure of shipments, which includes aircraft and is used by the BEA to estimate business equipment spending for quarterly GDP, is up 15.8% annualized in Q2, stepping up from Q1′s 13.4% rate. More businesses could be replacing hard-to-find workers with digital technologies to alleviate production issues.”
“@SBarlow_ROB BMO sees evidence that productivity investment compensating for worker shortages” – (research excerpt) Twitter
“@SBarlow_ROB Tracking the robot takeover” – (Citi research excerpt on Rockwell Automation results) Twitter
Credit Suisse analyst Fahad Tariq sees significant upside for the gold bullion price,
“The 10Y U.S. TIPS yield (i.e. real rate) has declined to -1.11%, lower than levels observed last year when the gold price exceeded $2,000/oz … a lower real rate is historically strongly correlated with a higher gold price. Key to watch will be commentary from the Fed policy meeting this week – we anticipate continued accommodative policy for some time … Our Global Equity Strategy team’s two factor model for gold prices (Figure 1) incorporates the TIPS yield and U.S. dollar index. Based on current data – a TIPS yield of -1.11% and USD index of 105 – our estimate for gold’s fair value is $1,914/oz, which represents ~6.3% upside from ~$1,800/oz spot. It appears that gold prices have decoupled somewhat from the TIPS yield in recent weeks, but we do not expect this to last, suggesting near-term upside for gold. We continue to forecast gold prices ending 2021 at $2,000/oz.”
“@SBarlow_ROB CS sees significant upside for gold price” – (research excerpt) Twitter
Longer term readers of this column know that health care is one of my favourite two market sectors for extended investment time horizons (cloud computing being the other).
I’m specifically bullish on orthopedics specifically – Stryker Corp. (which I own personally) and Zimmer Biomet Holdings are the two dominant companies – and the former announced promising profit results earlier this week.
Citi analyst Joanne Wuensch’s earnings recap report was called Now That’s A Recovery: Beating on Every Metric,
“Despite worries regarding the elective procedure recovery, Stryker joins the MedTech companies reporting better-than-expected 2Q21 and raising guidance. Hips and Knees improved q/q, returning to positive growth … 2Q21 revenue of $4.29B (up 42.9% organic y/y; up 9.3% vs. 2Q19), surpassed the consensus’s $4.14B, with each franchise exceeding consensus. Orthopaedics delivered $1.63B (up 50.7% y/y; up 6.7% versus 2019); MedSurg of $1.75B (up 29.6% y/y; up 8.3% versus 2019), and Neurotechnology/Spine of $918M (up 61.8% y/y, up 15.5% versus 2019). Operating margins expanded to 25.9% from 12.5% y/y and 23.5% q/q, leading to EPS of $2.25 ahead of the Street’s $2.14. Looking forward, management increased organic revenue guidance to up 9-10% versus 2019 from 8-10%, plus the combined Wright/Extremities up 6%, and EPS to $9.25-$9.40 (versus consensus’s $9.19). We reiterate our Buy rating, raising our TP to $310 from $303. "
Based on consensus price targets, analysts see a lot more upside for Zimmer Biomet (17.2 per cent) than Stryker (4.7 per cent).
“@SBarlow_ROB Citi’s Stryker Corp recap “Now That’s A Recovery: Beating on Every Metric " (I’m long)” – (research excerpt) Twitter
“Four reasons I just bought this stock that’s been crushing the S&P 500″ – Inside the Market (November 11, 2019 )
Diversion: “Why remote working leaves us vulnerable to cyber-attacks” – BBC
Tweet of the Day:
Ending the UI expansion in Texas has not solved the labor tightness problems for employers.— Joe Weisenthal (@TheStalwart) July 27, 2021
Interesting comment here from proprietor in the food/drinks industry https://t.co/uaWU4zKvhj pic.twitter.com/oTFZO6A4Ig
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