Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
CIBC analyst Scott Fromson assessed the Trudeau government’s proposed measures to curb single-use plastics and finds a potential winning stocks,
“We believe that Winpak’s expertise in product R&D, materials engineering and manufacturing technology forms the basis of its competitive advantage. This comes through in its high EBITDA margins: ~21%-23% vs. industry average ~15%-16%. Winpak’s sustainability product initiatives exemplify its technical expertise; notable recycle-ready products include flexible pouches, protein trays, spouted pouches and single-polymer in-mould label containers. Further, CEO Olivier Muggli is a long-time advocate of sustainability initiatives. Where other companies are in the earlier stages of sustainability product development, Winpak is advancing the products to get the company to its 2025 circularity goals.”
"@SBarlow_ROB Winpak set to benefit from Trudeau government’s plastics/sustainability measures' – (research excerpt) Twitter
Citi strategist Hong Li sees the beginnings of a market rotation to more cyclical sectors, with Canadian Imperial Bank of Commerce a potential winner
“Tech remains relatively crowded around the globe, but we continue to observe a shift towards cyclical sectors such as Consumer Discretionary, Industrials, and Materials in most regions. Financials continue to remain towards the bottom of the pack for crowding, while Utilities and REITs are flat to down again in all regions except Japan. Energy had significant moves last month and is now the most crowded sector in both Japan and Australia.”
Mr. Li included a table of U.S.-traded stocks with the lowest allocations in actively managed portfolios where Citi’s analyst had Buy-rated the stocks and CIBC topped the list.
The other stocks on the list (in order of lowest crowding) are Allstate Corp., Progressive Corp., Gilead Sciences Inc., Endo International PLC, and Minerva Neurosciences Inc. The inference here is that managers will have to buy the stocks if they begin to perform well in order to keep up with their benchmarks.
@SBarlow_ROB C: least crowded U.S. traded, buy rated stocks. CIBC tops the list" – (table) Twitter
Karina Fernandez-Stark, an expert on global supply chains, has written a paper declaring “A New Age of Copper” for academic website VoXEu,
“The red metal conducts both heat and electricity, and is a key input for global manufacturing, electrical equipment, industrial machinery, and construction. China’s post-pandemic rebound has already translated into higher orders. In June 2020, China recorded the highest ever monthly imports of copper… [the] rise in demand is thanks in part to copper’s central role in the digital and green economy of the future. Clean energy is the fastest growing segment to support electrification, with solar panels and wind turbines requiring some 12 times more copper than previous generation methods (Copper Development Association 2020a). Further, electric vehicles use four times the amount of copper used in internal combustion engines (Glencore 2017). A Chinese national 5G network will require some 72,000 tons of copper (Mills 2020). COVID-19 has also brought copper to the forefront of the healthcare industry due to its antimicrobial properties, adding entirely new sources of demand (Copper Development Association 2020b)”
The paper does not mention individual companies but I will point out that Morgan Stanley recently named Canada’s First Quantum Minerals among its top picks in the global mining sector.
“COVID-19 and the new age of copper: Opportunities for Latin America” – VoxEu
Newsletter: “Portfolio managers prepare for President Biden” - Globe Investor
Diversion: " These are the most subscribed-to Spotify playlists" – A Journal of Musical Things
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