Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Citi U.S. equity strategist Tobias Levkovich sees five reasons for investors to add value stocks right away (my emphasis),
“More vaccines and better therapeutics likely are coming, allowing for some return to a semblance of normal… The stunning 8.5% underperformance of the Russell Growth Index versus its Value counterpart in two days clearly caught many portfolio managers poorly positioned … The Pfizer news only may be the start of likely promising developments over the next several months … We believe that the Street will witness a significant change in business activity beginning in February/March next year due to difficult and easy comparisons for both COVID-19 beneficiaries and impaired companies, respectively… Our proprietary lead indicator model is arguing for the style allocation shift. The statistical analysis built on studying which eight to ten economic factors have influenced relative stock price performance is arguing for value over growth … The IT sector and related businesses accounted for more than 35% of the S&P 500 constituency, and such lopsided weights have never lasted in the past.”
"@SBarlow_ROB Levkovich: 5 reasons the value rally is sustainable' – (research excerpt) Twitter
The Credit Suisse research team just added Teck Resources Ltd. to its list of #1 Top Performers stocks in North America. The 56-member list includes the analysts top ideas among outperform rated stocks.
Other notable stocks on the list are renewable power equipment firm Bloom Energy Corp., DR Horton Inc., JP Morgan Chase, Regeneron Pharmaceuticals , IQVIA Holdings and Edwards Lifesciences in health care, UPS in transportation, Alphabet Inc, IBM, Oracle Corp., and Motorola Solutions Inc.
Credit Suisse also posted a much shorter list of Canadian top picks, which is just Element Fleet Management Corp., TransAlta Corp., Canadian Natural Resources and Newmont Corp.
"@SBarlow_ROB CS: #1 Top Performer stock list includes Teck Resources' – (table) Twitter
See also: " @SBarlow_ROB CS top Canadian stock picks' – (table) Twitter
BofA quantitative strategist Savita Subramanian also tackled the potential style rotation from growth to value with more of a focus on stocks most at risk of a sea change,
"We hear ‘Cold weather will stop this trend’, ‘Low rates keep the growth trade going’, ‘Delayed stimulus will keep investors in stable rather than cyclical growth’, ‘What’s different now versus a few months ago?’, ‘Value = rental’ and so on. This suggests entrenched positioning, resistance to abandon growth stocks… "
An accompanying table shows stocks Ms. Subramanian sees the institutionally over-owned with the most downside in the event of value outperformance (click link below for methodology). These include a lot of market favouites – Netflix Inc., salesforce.com, Facebook Inc., Activision Blizzard and Amazon.com.
"@SBarlow_ROB Subramanian: “Stocks at risk of a longer-lived style rotation"” – (table) Twitter
Diversion: “Take a Look Inside the Washington State Murder Hornet Nest” – Gizmodo
Tweet of the day:
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