A roundup of some of the North American equities making moves in both directions today
On the rise
Suncor Energy Inc. (SU-T) was higher on Tuesday in response to the announcement it is set to take over operation of Syncrude Canada Ltd., one of the country’s largest oil sands projects, in the latest example of consolidation in Alberta’s pandemic-ravaged oil sector.
Syncrude is a joint venture between Suncor, Imperial Oil Resources Ltd., Sinopec Oil Sands Partnership and CNOOC Oil Sands Canada. Despite the fact it’s owned by oil industry heavyweights, the mine itself is operated by Syncrude’s separate governance structure.
That will all change by the end of 2021, when Suncor takes over operation of the mine, the Calgary-based company announced Monday evening.
Suncor’s president and chief executive Mark Little told The Globe and Mail Monday night that Imperial, Sinopec and CNOOC have all agreed in principle to the move, though it’s yet to receive formal approval.
No cash changes hands under the deal. Instead, Syncrude will become another of Suncor’s multiple operating assets – similar to its Fort Hills mine, its Oil Sands Base Plant and the company’s in situ assets MacKay River and Firebag.
- Emma Graney
Enbridge Inc. (ENB-T) was up after it said on Monday it received federal permits for its Line 3 crude pipeline replacement project from the U.S. Army Corps of Engineers, moving closer to building the pipeline in the United States after years of delay.
Line 3, which ships crude from Canadian oil hub Alberta to U.S. Midwest refiners, currently carries less oil than was designed for because of age and corrosion. Replacing the line, built in the 1960s, would allow Calgary-based Enbridge to roughly double its capacity to 760,000 barrels per day.
Final state permits and authorizations are still needed before Line 3 work can begin, Enbridge said, adding it hopes to start construction before the end of the year.
Cannabis stocks continued to soar on Tuesday, extending gains following the U.S. presidential election.
President-elect Joe Biden and the Democrats have promised to federally decriminalize marijuana, a move that will allow cash-strapped cannabis producers access to much needed new investor dollars
Under the NCIB, the company is authorized to purchase up to 9.7 million of its Class B non-voting shares, representing approximately 5 per cent of the public float as at Nov. 1.
CI Financial Corp. (CIX-T) was higher after announcing the acquisition of majority ownership in RGT Wealth Advisors LLC, a Dallas-based registered investment advisor with approximately US$4.7 billion in wealth assets.
“The agreement represents CI’s 10th direct U.S. wealth management acquisition this year and 13th overall (including acquisitions by CI affiliated RIAs),” the company said. “The addition of RGT, in combination with the completion of other previously announced transactions, is expected to increase CI’s total U.S. wealth assets to approximately US$21 billion.”
Vancouver-based CanWel Building Materials Group Ltd. (CWX-T) was up after announcing the TSX has accepted its notice of intention to proceed with a normal course issuer bid for cancellation up to 5.97 million common shares, or approximately 10 per cent of the public float.
General Electric Co. (GE-N) increased after it warned of more job cuts at its aviation unit, citing a lengthy recovery for the airline industry from the impact of the coronavirus crisis.
The job cuts are the latest setback for the aviation sector, with the industry’s woes expected to last into 2021 even as U.S. regulators ended a 20-month grounding of Boeing Co’s MAX 737 jets and COVID-19 vaccine developers reported positive data.
“As we continue to closely monitor market conditions, we are examining a range of options to appropriately scale our business to match the realities of the global airline industry recovery from the severe impacts of COVID-19,” the company said in a statement.
The Boston-based conglomerate in May announced plans to cut the global workforce at its aviation unit by as much as 25 per cent in 2020, or up to 13,000 jobs, citing prolonged aircraft reduction schedules caused by the pandemic.
Revenue at GE’s aviation unit, its largest, fell 39 per cent in the third quarter while aviation orders more than halved during the period, with a 60-per-cent decline in both commercial engines and commercial services.
Dollar Tree Inc. (DLTR-Q) reported better-than-expected quarterly results on Tuesday, as the discount store operator benefited from higher demand for cheaper groceries and household items during a coronavirus-induced economic downturn.
Shares of Dollar Tree gained as the company also said it would expand its higher-priced offering, Dollar Tree Plus, into about 500 stores starting in the spring of 2021, after an initial test in more than 100 stores.
The announcement comes after rival Dollar General unveiled the launch of Popshelf stores, which are aimed at consumers spending more on non-essential items priced at US$5 or less.
Sales at dollar stores, which typically sell products at US$1, have remained strong even after the initial panic-buying at the start of lockdowns, with high U.S. unemployment and falling household income boosting demand for affordable cereals and vegetables.
Dollar Tree Chief Executive Officer Mike Witynski said the chain was off to a good start to its holiday quarter, with same-store sales at both its labels tracking above their third-quarter levels.
Same-store sales at the company’s eponymous business increased 4 per cent in the quarter ended Oct. 31, while they rose 6.4 per cent at Family Dollar stores.
Net income rose to US$330-million, or US$1.39 per share, from US$255.8-million, or US$1.08 per share, a year earlier. Analysts on average were expecting a profit of US$1.15 per share, Refinitiv IBES data showed.
Tiffany & Co. (TIF-N), which is being bought by French luxury giant LVMH, rose after it beat Wall Street expectations for quarterly profit on Tuesday as the U.S. jeweler benefited from an over 70-per-cent rise in sales in China and a recovery in demand at home.
The results bode well for the upcoming holiday season for the jeweler and other luxury retailers in general, which have been hit hard by the pandemic. They also underscore the growing importance of sales within mainland China to offset dependence on tourism, especially on Chinese tourists visiting fashion hubs like Milan and Paris.
“We had a strong third quarter .... which speaks volumes about the enduring strength of the Tiffany brand and gives us confidence as we enter the important holiday season,” Chief Executive Officer Alessandro Bogliolo said, nodding to “the successful completion of the merger transaction with LVMH in early 2021.”
Tiffany and LVMH ended a bitter legal battle last month and agreed to a new deal that would see the French firm buy out the U.S. jeweler at a slightly lower price of US$15.8-billion, or at a discount of US$425-million.
Tiffany said sales in the Asia-Pacific region rose 30 per cent, while sales in the Americas region declined 16 per cent - much smaller than the 46-per-cent drop seen in the preceding quarter.
Tiffany forecast a mid-single-digit percentage decline in holiday quarter sales, while analyst had predicted a 3-per-cent drop. It also expects a high-single-digit percentage increase in earnings for the current quarter.
Excluding certain item, Tiffany earned US$1.11 per share, surging past the average expectation of 66 US cents.
McCormick & Co Inc. (MKC-N) increased after it said on Tuesday it would buy hot-sauce maker Cholula’s parent from private equity firm L Catterton for US$800-million, as it looks to cash in on robust demand for packaged foods during the COVID-19 pandemic.
Several food producers, ranging from plant-based patty maker Beyond Meat Inc to breakfast cereal maker Kellogg Co , have seen a surge in their sales to supermarkets as people cook more at home due to the health crisis.
McCormick, which already owns Frank’s RedHot and Old Bay hot sauce brands, reported an 8-per-cent jump in sales in its latest reporting quarter, as higher at-home food consumption outweighed weak sales to its restaurant partners.
Hot sauces have grown in popularity in recent years, thanks in part to the rising popularity of spicier cuisines such as Thai and Szechwan, as well as the pop-culture influence of YouTube shows such as Hot Ones.
Cholula’s annual net sales are about US$96-million and are expected to grow in the mid-to high-single digits in a normalized environment beyond the pandemic, McCormick said.
Abercrombie & Fitch Co. (ANF-N) was up after surging past Wall Street expectations for quarterly profit and sales on Tuesday, as the apparel retailer reined in costs and benefited from growing online demand from stuck-at-home consumers.
The retailer also said it would exit four more of its European flagship locations by the end of January, as Abercrombie looks to reduce its dependence on demand from tourists that has taken a hit due to the COVID-19 pandemic.
Apparel retailers are ramping up investments in their digital platforms to combat declining store traffic as customers shift to online shopping due to the pandemic, tapping popular social media influencers and adding options such as curbside pickups.
Abercrombie’s digital sales, which jumped 43 per cent, were also boosted by demand for its Gilly Hicks brand’s activewear and loungewear as customers staying at home turn to comfortable clothing.
Despite the robust results, Chief Executive Officer Fran Horowitz was still cautious about the future.
“We are encouraged by quarter-to-date results... However, this is tempered by uncertainty regarding the potential for increased COVID-related store restrictions and our expectation for elevated shipping, handling and freight costs.”
Excluding one-time items, the company reported a profit of 76 US cents per share in the third quarter ended Oct. 31, compared with expectations of break-even, according to IBES data from Refinitiv.
On the decline
Best Buy Co Inc. (BBY-N) held back from issuing a holiday-quarter forecast on Tuesday, saying it was unsure if a sales boom fueled by demand for remote-work computer equipment was sustainable as the COVID-19 pandemic rages on in the United States.
Shares of the consumer electronic retailer, which has been one of the few retail winners in the health crisis, fell, even as it beat third-quarter sales and profit estimates.
“It is very difficult for us to predict how sustainable these trends will be due to the significant uncertainty related to the various impacts of the pandemic,” Chief Financial Officer Matt Bilunas said.
The company’s caution comes as consumers cut back spending on non-essential products in the absence of government stimulus, raising concerns of a tough holiday season for retailers.
Meanwhile, infections continue to surge across the country, making it difficult for companies to draw up their expectations for the season.
Best Buy’s comparable sales jumped 23 per cent in the third quarter ended Oct. 31, beating expectations of a 14.7-per-cent increase, according to IBES data from Refinitiv.
Total revenue rose 21.4 per cent to US$11.8-billion a year earlier, above market expectations of about US$11-billion.
Excluding one-time items, the company earned US$2.06 per share, beating analysts’ average estimate of US$1.70 per share.
Best Buy said it plans to resume share buybacks in the fourth quarter.
With files from staff and wires