Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Credit Suisse global strategist Andrew Garthwaite published a list of his top 10 investing opportunities.
Some, like European renewable power companies and emerging markets equities, are less interesting for Canadian investors (in the former case there are domestic alternatives, in the latter case Canadian equities show a high correlation to emerging markets stocks) but others are worth considering.
Mr. Garthwaite likes industrial gases companies (Air Liquide and Air Products) because of rising hydrogen demand and construction materials companies like CRH and Lafarge on U.S. housing demand. Credit Suisse also likes mining stocks on Chinese demand (Anglo American is favoured), defence stocks (BAE) and 5G telecom equipment (Ericsson).
“@SBarlow_ROB CS: 10 investing opportunities in global markets” – (research excerpt) Twitter
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Morgan Stanley U.S. equity strategist Michael Wilson is warning investors away from the pandemic/work from home winners and towards more cyclical sectors (my emphasis),
"While many seem to favor companies that have been able to operate normally during this pandemic and take share, this may not be the best investment strategy from here. Essential businesses/services or digital transformation enablers have been spectacular performers this year, but this just means that expectations are high and comparisons difficult. Furthermore, there is likely to be some payback on demand and loss of wallet share next year for such companies. In contrast, businesses and services that have not been able to operate normally may provide better investments at this time primarily because expectations remain low and wallet share gains are likely … One such area is infrastructure, where the world has underinvested for years, especially in the United States. With central banks willing and able to finance such a popular endeavor, we think that this is one very attractive investment opportunity today.
“This would favor companies in the industrial and materials sectors, particularly base metals like copper. We also think that there could be pockets of acute inflation next year as demand comes roaring back to the parts of the economy where supply has been destroyed”
"@SBarlow_ROB MS: Infrastructure/reflation stocks over pandemic winners' – (research excerpt) Twitter
“@SBarlow_ROB CIBC: Copper rally not helping Cdn economy much” – (research excerpt) Twitter
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RBC Capital Markets technology analyst Paul Treiber thinks the winners in domestic technology will keep on winning,
“Top Canadian technology ideas remain: SHOP, KXS, CSU, and ENGH. Structural winners likely to still keep winning. We believe that the trends that have accelerated demand for structural winners like SHOP and KXS are likely to be sustained in Q3. We believe e-commerce uptake and momentum remains elevated compared to previous trends. The shift to work from home (WFH), video conferencing and new digital initiatives to help better manage supply chains is likely to persist, in our view. The rallies in these stocks have taken a pause in Q3 which, in our view, improves the risk/reward for these stocks this quarter. As a result, we recommend investors maintain overweight positions in SHOP and KXS, given both are exposed to large growth opportunities and are likely to experience sustained/accelerating growth”
“@SBarlow_ROB RBC on Cdn tech - winners will keep winning” – (research excerpt) Twitter
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Diversion: “What is artificial intelligence, exactly? The question may seem basic, but the answer is kind of complicated” – M.I.T. Technology Review
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Scott Barlow