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A look at North American equities heading in both directions

On the rise

Shares of AltaGas Ltd. (ALA-T) gained 4.6 per cent following the premarket announcement of a 6-per-cent dividend increase.

The energy infrastructure company says it will pay a quarterly dividend of 28 cents per share, up from 26.5 cents per share.

The increased payment to shareholders came as AltaGas says it expects normalized earnings per share of $1.85 to $2.05 in 2023.

The result was forecast along with expectations for normalized earnings before interest, taxes, depreciation and amortization of $1.5-billion to $1.6-billion next year.

AltaGas says its capital program for 2023 is expected to total about $930-million, excluding asset retirement obligations.

The company also expects about $90-million of capital investments that were approved in 2022 to be spent in early 2023.

In a research note, iA Capital Markets analyst Matthew Weekes said: “ALA’s 2023 guidance, CAPEX plan, and dividend growth are all in line with our prior expectations. ALA projects 1.5-per-cent Normalized EBITDA growth and 4-per-cent Normalized EPS growth, driven by several puts and takes on a YoY basis. ALA aims to take a more de-risked approach to its Midstream business in 2023 and beyond that is more aligned with practices in previous years. The guidance reinforces our outlook and we continue to believe that ALA offers valuation upside and strong organic growth, with a focus on optimizing assets, strengthening risk-adjusted returns, and lowering the leverage profile with the sale of the Alaskan Utilities expected to close in the near-term and additional upside through an eventual completion and sale of the interest in the Mountain Valley Pipeline. We reiterate our Buy rating.”

Cannabis companies, including Tilray Inc. (TLRY-T) and Canopy Growth Corp. (WEED-T), continued to surge following a report late last week from Axios that a bipartisan group of U.S. senators plans to add marijuana legislation to year-end bills.

The Prime Alternative Harvest Index NTR was higher for a fifth consecutive day, while Horizons Marijuana Life Sciences ETF (HMMJ-T) also maintained its momentum.

In early October, shares of Canada’s largest cannabis companies rose sharply after U.S. President Joe Biden announced plans to review how the drug is classified under federal law and said he will pardon Americans with previous cannabis offences.

While not a promise of legalization, the review was seen by investors as a step toward the long-awaited legislation that could allow Canadian cannabis producers to expand their operations into new markets south of the border.


Vancouver-based Sigma Lithium Corp. (SGML-X) jumped after it announced Sunday a production expansion study showed positive results for a potential tripling of battery-grade lithium concentrate production in the second year at its 100-per-cent-owned Grota do Cirilo Project in Minas Gerais, Brazil.

The company expects to produce 270,000 tons of battery-grade lithium in 2023 with an increase to 768,000 tons in the second year of the project.

See also: Monday’s analyst upgrades and downgrades

U.S.-listed Chinese stocks, including Alibaba Group (BABA-N) and (JD-Q) gained following a Reuters report that China was set to further ease some of the world’s toughest COVID curbs as early as Wednesday.

Asian shares had been boosted early on Monday by hopes that China’s steps to ease its zero-COVID policy would support global growth and increase commodity demand.

More Chinese cities announced an easing of COVID-19 measures on Sunday, after protests against the restrictions last weekend. The news boosted Chinese stocks and pushed the yuan past 7 per dollar. MSCI’s broadest index of Asia-Pacific shares outside Japan was up 1.7 per cent.

“I think for an amount of time we won’t know the real definition of zero-COVID because it has been changing and evolving very very quickly in the last two weeks,” said Eddie Cheng, head of multi-asset portfolio management at Allspring Global Investment.

The new easing “could add to a stronger demand for raw materials but we also need to see ... how it evolves,” Cheng said.

China’s “zero-COVID” policies have weighed heavily on the world’s second-largest economy. Services activity shrank to six-month lows in November.

Market sentiment in Europe is still under pressure from “some inflation forces,” Cheng said, in particular the region’s energy crisis.

On the decline

Aurora Cannabis Inc. (ACB-T) turned lower in afternoon trading and closed down 1.6 per cent after it announced it has repurchased about $102.5-million of its convertible senior notes at a total cost, including accrued interest, of $99.4-million. Following the completion of the repurchase, Aurora said will have approximately $148-million of notes outstanding.

Tesla Inc. (TSLA-Q) fell 6.3 per cent in response to a Reuters report that it plans to cuts December Model Y output at its Shanghai plant by more than 20 per cent from November.

The company later said the report was “untrue.”

Separately, Tesla delivered 100,291 China-made electric vehicles (EVs) in November, the highest monthly sales since its Shanghai factory opened in late 2020, according to a Xinhua report released on Monday.

The number marks a 40-per-cent increase from October and 89.7 per cent more compared to a year ago after the U.S. automaker ramped up output at the Shanghai plant, cut prices for the best-selling models and offered incentives to Chinese buyers.

Hertz Global Holdings Inc. (HTZ-Q) was lower after it said on Monday it will pay about US$168-million by year-end to resolve over 95% of pending claims from owners who alleged the car rental giant filed wrongful theft reports.

Some customers had sued Hertz alleging the police detained or arrested individuals in error after the company reported rental cars were stolen.

Hertz, which operates Hertz, Dollar and Thrifty vehicle rental brands, said it will recover a “meaningful” portion of the settlement amount from its insurers. The settlement resolves 364 pending claims from car owners.

Hertz said it does not expect the resolution of these claims to have a material impact on its capital return plans for this and next year.

The company in October reported a 12-per-cent jump in third-quarter revenue, amid strong demand for rental cars. Profit, however, rose just 1 per cent on elevated maintenance costs.

VF Corp. (VFC-N) fell after announcing on Monday Chief Executive Officer Steve Rendle’s retirement and named its lead independent director Benno Dorer as interim CEO effective immediately.

Mr. Rendle, who was also chairman of the board, served as CEO for nearly six years and has been with the apparel and footwear maker for about 25 years.

The Vans sneaker maker said it has started looking for a permanent CEO and named Richard Carucci as interim chairman of the board.

Mr. Dorer joined VF Corp’s board in 2017 and has served as the company’s lead independent director since 2021.

Shares of the company fell as it also cut its annual 2023 forecasts citing weaker-than-anticipated demand across categories, primarily in North America, which has resulted in higher discounts.

The company now expects annual revenue to increase by 3 per cent to 4 per cent in constant dollar, compared with its previous growth forecast of 5 per cent to 6 per cent.

It also lowered its adjusted profit per share forecast for a second time in as many months to between US$2.00 and US$2.20, compared with its prior outlook of US$2.40 to US$2.50

With files from Brenda Bouw, staff and wires

Follow David Leeder on Twitter: @daveleederOpens in a new window

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