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A roundup of some of the North American equities making moves in both directions today

On the rise

Shares of Tesla Inc. (TSLA-Q) jumped after S&P Dow Jones Indices confirmed after markets closed on Monday that they would add the company to Wall Street’s main index from Dec. 21, firing the starting gun on a major reorganization of investment funds that track the basket of stocks.

At US$400-billion, Tesla’s market capitalization is a hundred times that of the S&P’s smaller companies, according to Refinitiv data, and potentially making it the biggest ever addition to the index.

S&P DJI said the addition of the car company would require investment funds indexed to the S&P 500 to sell about US51-billion worth of shares of current member companies so that their portfolios correctly reflect the index.

“Potentially one of the pushbacks on adding Tesla to the S&P was the elevated stock price,” Credit Suisse analyst Dan Levy wrote in a note. “The stock’s recent pullback provides better opportunity for index trackers to build positions.”

See also: Tesla to join S&P 500, spark epic index fund trade

Vancouver-based fintech firm Mogo Inc. (MOGO-T) rose after announcing before the bell a definitive agreement to acquire Carta Solutions Holding Corp. in an all-stock transaction.

Under terms of the deal, Mogo will acquire 100 per cent of the outstanding shares of Carta in exchange for the issuance of 10-million common shares, which is equal to a purchase price of $24.2-million based on the Monday closing price.

“The combination creates one of Canada’s largest vertically integrated fintech companies and significantly expands the Company’s addressable market by entering into the $2.5 trillion global digital payments market,” said Mogo in a statement.

George Weston Ltd. (WN-T) gained after it raised its dividend as it reported its latest quarterly results.

The company, which operates through Loblaw, Choice Properties and Weston Foods, says its quarterly dividend will be increased to 55 cents per share, up from 52.5 cents per share.

In its quarterly report, George Weston says it earned a profit available to common shareholders of $303-million or $1.96 per diluted share for its latest quarter, up from $69-million or 44 cents per diluted share a year earlier.

The company says the increase was due to the favourable year-over-year net impact of adjusting items totalling $263-million.

On an adjusted basis, George Weston says it earned a profit available to common shareholders of $362-million or $2.35 per diluted share, down from $391-million or $2.54 per diluted share in the same quarter last year.

Revenue in the 16-week period ended Oct. 3 totalled $16.21-billion, up from $15.23-billion a year ago.

TC Energy Corp. (TRP-T) closed higher in the wake of saying on Tuesday indigenous group Natural Law Energy will make an equity investment of up to $1-billion in its controversial Keystone XL pipeline project.

The Keystone XL pipeline, which would run from the Canadian energy-producing province of Alberta to Nebraska, has been delayed for more than a decade due to opposition from landowners, environmental groups and tribes.

The first phase of the transaction with NLE, created as a coalition of First Nations in Saskatchewan and Alberta, is expected to close in the third quarter of 2021, and is contingent on NLE securing financing.

The agreement also contemplates NLE pursuing an interest in future oil projects.

TC Energy’s existing crude pipelines infrastructure connects Alberta oil supplies to U.S. refining markets, as well as U.S. crude oil supplies from the key market hub at Cushing, Oklahoma to the U.S. Gulf Coast. It also provides intra-Alberta crude transportation.

TC Energy expects Keystone XL to enter service in 2023. Construction is underway in Canada, and the pipeline operator was working on a revised 2020 U.S. work plan focusing on areas that have all permits and approvals.

See also: Ottawa says asking Joe Biden not to cancel Keystone is ‘top of the agenda’

Amazon (AMZN-Q) was higher after launching an online pharmacy for delivering prescription medications in the United States on Tuesday, increasing competition with drug retailers such as Walgreens, CVS and Walmart.

Called Amazon Pharmacy, the new store lets customers price-compare as they buy drugs on the company’s website or app. Shoppers can toggle at checkout between their co-pay and a non-insurance option, heavily discounted for members of its loyalty club Prime.

The move builds on the web retailer’s 2018 acquisition of PillPack, which Amazon said will remain separate for customers needing pre-sorted doses of multiple drugs.

Over the past two years, Amazon has worked to secure more state licenses for shipping prescriptions across the country, which had been an obstacle to its expansion into the drug supply chain, according to analyst notes from Jefferies Equity Research.

The company founded as an online bookseller has disrupted industries including retail, computing and now potentially pharmaceuticals, drawing criticism of its size and power from labor groups and lawmakers along the way.

Amazon faces entrenched competition from Walgreens Boots Alliance Inc, CVS Health Corp, Walmart Inc, Rite Aid Corp , Kroger Co and others. Take-up of online ordering of drugs has been low, according to market research from J.D. Power.

Shares of Rite Aid Corp. (RAD-N), CVS Health (CVS-N), and Walgreens (WBA-Q) all dropped on the news.

Membership-only supermarket chain Costco Wholesale Corp. (COST-Q) rose after it declared a special dividend of US$10 per share as it benefits from consumers stocking up essentials due to the COVID-19 pandemic.

The dividend totaling US$4.4-billion would be funded through existing cash. It will be paid on Dec. 11 and is the company’s fourth such payout in eight years.

Higher demand for fresh produce, appliances and gardening and sporting goods has helped the warehouse chain record growing sales and traffic at its stores, where customers typically buy items in bulk at lower prices.

Separately, Warren Buffett’s Berkshire Hathaway Inc said it has dissolved its stake in Costco.

U.S. retailer Kohl’s Corp. (KSS-N) posted a bigger-than-expected decline in quarterly same-store sales on Tuesday, as lower traffic at department stores due to the COVID-19 pandemic hammered demand for footwear and apparel.

The mid-priced chain’s shares, which have nearly halved in value this year, rose in morning trading.

U.S. department stores, struggling to boost sales even before the pandemic, have had to offer heavy discounts and invest in their e-commerce business to keep pace with online-centric, off-price and deeper-pocketed big-box retailers.

Same-store sales at Kohl’s decreased 13.3 per cent in the third quarter, even as Kohl’s said digital sales growth remained strong. Analysts on average had expected an 11.39-per-cent decline, according to IBES data from Refinitiv.

Net sales fell about 13 per cent to US$3.78-billion in the quarter ended Oct. 31.

Kohl’s reported a net loss of US$12-million, or 8 US cents per share, compared with a profit of US$123-million, or 78 US cents per share, a year earlier.

Excluding items, Kohl’s earned 1 US cent per share, compared with the average analyst estimate of a loss of 43 US cents, as it cut selling, general, and administrative expenses.

Kohl’s also said it plans to reinstate its quarterly dividend in the first half of 2021 after a COVID-19-led pause.

On the decline

Barrick Gold Corp. (ABX-T) lost ground after Warren Buffett’s Berkshire Hathaway Inc.. (BRK.B-N, BRK.A-N) revealed it has cut its stake in the Toronto-based miner by 42.6 per cent to 12 million shares.

The company disclosed in a filing this past August that it bought 21 million shares of Barrick for about US$564-million in the second quarter of this year. The move surprised several investors and sparked a rally in Barrick shares at the time, as Buffett had been earlier quite critical of gold, saying it wasn’t as good of an investment as businesses, farms and real estate.

Berkshire also disclosed new stakes in Abbvie Inc. (ABBV-N), Bristol-Myers Squibb Co. (BMY-N) and Merck & Co. (MRK-N) of more than US$1.8-billion each, and a new US$136-million stake in Pfizer Inc. (PFE-N).

CAE Inc. (CAE-T) was down after announcing the acquisition of Flight Simulation Company B.V. for a cash consideration of €70-million (approximately $108-million).

“The acquisition expands CAE’s ability to address the training market for customers operating in Europe, including airline and cargo operators,” it said. “It provides CAE with an expanded portfolio of customers and an established recurring training business which is highly complementary to CAE’s network. FSC is based in Amsterdam and includes a modern fleet of mainly CAE-built full-flight simulators (FFSs) and training devices, comprised of nine narrow body B737 and A320 FFSs, two widebody aircraft FFSs and one regional jet. This acquisition is consistent with CAE’s internal acquisition criteria and capital allocation priorities, similar to its other recent bolt-on acquisitions, and is expected to be accretive to earnings in its first full year.”

Walmart Inc. (WMT-N) was lower after it posted a bigger-than-expected increase in quarterly same-store sales and beat expectations for profit on Tuesday amid a 79-per-centsurge in its online business with overall rises in spending on electronics, sporting goods and groceries.

Sales at U.S. stores open at least a year rose 6.4 per cent, excluding fuel, in the third quarter ended Oct. 31. Analysts had estimated an increase of 4.16 per cent, according to IBES data from Refinitiv.

The surge in demand for essentials at Walmart seen at the peak of the coronavirus lockdowns has carried into the second half of the year, with consumers relying on its same-day delivery options and store pick-up services to buy everything from groceries to sneakers.

“We think these new customer behaviors will largely persist and we’re well positioned to serve customers with the value and experience they’re looking for,” Chief Executive Officer Doug McMillon said in a statement.

The COVID-19 pandemic has also forced retailers to drastically rethink how they do business during the key holiday season, with many big retailers including Walmart, Kohl’s , Target, and Best Buy moving their promotions up to as early as October.

Despite a slow start to the back-to-school shopping season, which typically begins in July, Walmart said it benefited later in the quarter from the delayed start.

Walmart said on Tuesday it incurred about US$600-million in additional COVID-19 expenses that included higher wages for warehouse workers and bonuses for store employees, as well as spending more on keeping its facilities clean. The retailer had recorded about US$1.5-billion in such expenses in the prior quarter.

Operating income jumped 22.5 per cent to US$5.79-billion in the third quarter, while Walmart reported adjusted earnings per share of US$1.34 that topped expectations for US$1.18.

Total revenue rose 5.2 per cent to US$134.71-billion, beating estimates for US$132.23-billion.

See also: Does vaccine promise put U.S. consumers in a shopping mood? Retailers may have clues

Home Depot Inc. (HD-N) said on Tuesday it will spend about US$1-billion more on employees' compensation annually as the home improvement chain benefits from a sustained surge in demand for tools, paint and building materials due to the COVID-19 pandemic.

Home Depot’s blue-chip stock, which has risen over 28 per cent this year, fell despite the company beating quarterly sales and profit estimates.

With limited options for travel or leisure activities, Americans are spending more time at home and using their discretionary income on minor home remodeling and repair work, since the lockdowns started in March.

“Despite elevated activity for most of 2020, (the home improvement) trend shows no sign of weakening and, if anything, is intensifying as we come into the winter months as consumers will be forced to stay inside more,” said Neil Saunders, managing director of GlobalData Retail.

The elevated activity has, however, also led Home Depot to spend more on its staff working through the health crisis, by providing temporary weekly bonuses and more hours of paid time off. The company said on Tuesday it will change some of those programs to permanent forms of additional compensation for frontline hourly employees.

The company, which on Monday said it would buy HD Supply Holdings a deal valued at about US$8-billion, posted a 24.1-per-cent rise in same-store sales for the third quarter ended Nov. 1, beating analysts' average estimate of a 14.8-per-cent increase.

Net earnings surged 23.9 per cent to US$3.43-billion, or US$3.18 per share. Analysts had expected a profit of US$3.06 per share, according to IBES data from Refinitiv.

Overall net sales jumped 23.2 per cent to US$33.54-billion, beating analysts' average estimate of US $32.04-billion.

With files from staff and wires

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