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

On the rise

General Electric Co. (GE-N) soared on Tuesday in the wake of offering an upbeat outlook for its business this year after reporting a surge in quarterly free cash flow.

The Boston-based industrial conglomerate predicted a free cash flow of US$2.5-billion to US$4.5-billion this year after generating cash flow of US$4.4-billion in the fourth quarter.

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That compares with Refinitiv’s average analyst estimate of US$3.03-billion for 2021 and about US$2.6-billion for the latest quarter.

The company had previously predicted a cash flow of at least US$2.5-billion in the fourth quarter and a return to positive cash flow for 2021.

Free-cash flow is closely watched by investors as a sign of the health of GE’s operations and ability to pay down debt.

With the earnings report signaling progress in Chief Executive Officer Larry Culp’s turnaround plan, GE’s shares jumped

Since taking over the company’s reins in 2018, Mr. Culp has been trying to revive GE’s fortunes by improving free cash flow and cutting debt. However, the coronavirus pandemic hit those efforts by hammering the company’s aviation unit, usually its most profitable and most cash-generative segment.

3M Co. (MMM-N), which makes N95 face masks, was up after reporting a better-than-expected quarterly profit on Tuesday, helped by lower costs and higher demand for its personal safety products and home care items such as Scotch-Brite during the COVID-19 pandemic.

3M has seen robust demand for disposable respirator masks, hand sanitizers and safety glasses amid a surge in coronavirus infections. Its home improvement products ScotchBlue painter tapes and Filtrete room air purifiers also gained traction, as people stayed home during the health crisis.

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The company has exposure to a wide range of end markets including aerospace and oil and gas, where demand plunged, forcing it to cut jobs and take out costs.

“We stayed focused on innovating for our customers, improving our operational execution and fighting the pandemic from every angle,” Chief Executive Officer Mike Roman said in a statement.

In December, 3M said it would cut about 2,900 jobs globally and scale back on investments in slower-growing markets as part of a restructuring that is expected to lead to pretax savings of up to $250 million.

3M said on Tuesday it expects its 2021 total sales to grow in the range of 5 per cent to 8 per cent, or 6.5 per cent at the midpoint, above analysts’ average estimate of a 5.4-per-cent increase, according to IBES data from Refinitiv.

Johnson & Johnson (JNJ-N) rose after it forecast 2021 profit above Wall Street estimates and promised data from its widely watched coronavirus vaccine trial soon, as the healthcare conglomerate races to develop a potential single-dose vaccine for COVID-19.

Separately, J&J chief financial officer told CNBC that the company was expecting data sometime next week and was optimistic that it would be robust.

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Public health officials are increasingly counting on single-dose vaccines like the one being tested by J&J, as it needs fewer resources to distribute and administer than the authorized shots from Pfizer Inc and Moderna, which require second shots several weeks later.

J&J, which runs a large medical device business in addition to its pharmaceuticals unit, forecast 2021 adjusted profit of between US$9.40 and US$9.60 per share, compared with analysts’ estimates of US$8.99 per share, according to IBES data from Refinitiv.

On an adjusted basis, the company earned US$1.86 per share, beating estimates of US$1.82 per share.

The company’s fourth-quarter sales rose to US$22.48-billion from US$20.75-billion, helped by higher demand for cancer drugs.

Shares of Canopy Growth Corp. (WEED-T) were up as it launched a line of cannabis-infused oil drops and soft-baked chews for dogs with lifestyle guru Martha Stewart, months after the successful release of her cannabidiol (CBD) gummie treats for humans hit shelves in the United States.

Ms. Stewart is banking on a nearly one-year partnership with the Canadian, the world’s top pot producer by market value, and now wants to reach pet owners and tap into a meteoric rise in demand for pot-based products.

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Last year, stay at home orders to stem the spread of COVID-19 limited people’s entertainment options and fueled stress and anxiety. Cannabis-infused edibles, like gummies and chocolates, and beverages were among the most highly-sought cannabis products.

CBD, a non-psychoactive compound derived mainly from hemp, is being researched for various medical applications and is widely advertised to have relaxing properties.

Ms. Stewart wants to bring those benefits to dogs with CBD oil drops and soft-baked chews, which she claims can help with mental and physical well-being, reduce stress and maintain joint health and movement.

With the impact of short selling gaining the spotlight in recent days, shares of U.S. retailer GameStop Inc. (GME-N) continued to rise on Tuesday.

An army of smaller-pocketed, optimistic investors is throwing dollars and buy orders at the stock of GameStop — in direct opposition to a group of wealthy investors who are counting on the stock price to plunge.

The resulting action is wild, with GameStop’s stock soaring nearly 145 per cent in less than two hours Monday morning, only for the gains to disappear quickly afterward.

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The struggling company has lost US$1.6-billion over the last 12 quarters, and its stock fell for six straight years before rebounding in 2020. So, it might seem like a strange place for the locus of so much movement. But GameStop has been a target of many professional investors, who say the company will continue to founder as sales of games continue to go online.

These investors have been betting that GameStop’s stock will fall. They “shorted” the stock, which means they borrowed shares and sold them, hoping to buy them back at a cheaper price and pocket the difference. But such bets have been disastrous recently.

Beyond Meat Inc. (BYND-Q) was higher after announcing it would form a joint venture with PepsiCo Inc. (PEP-Q) develop and sell snacks and beverages made from plant-based protein.

Plant-based meat alternatives, such as burger patties and sausages from Beyond Meat, have gained in popularity in recent years as curious health-conscious consumers look to broaden or shift from chicken, pork and beef-based diets.

Beyond Meat suffered a surprise loss in its last reported quarter as demand for its products at restaurants and grocery stores tapered after an initial surge at the start of the COVID-19 pandemic.

The new partnership with PepsiCo will give the faux meat maker access to the beverage giant’s distribution and marketing resources and allow it to expand into new product lines, Beyond Meat Chief Executive Officer Ethan Brown said.

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PepsiCo, which apart from its namesake soda owns the Lays, Quaker and Gatorade brands, has also been looking to expand its portfolio of health-focused snacks and beverages.

“Plant-based proteins represent an exciting growth opportunity for us, a new frontier in our efforts to build a more sustainable food system,” said Ram Krishnan, PepsiCo global chief commercial officer.

The financial terms of the partnership were not disclosed and the operations will be managed through a newly created entity, PLANeT Partnership LLC.

Apollo Global Management Inc. (APO-N) jumped after Leon Black said late Monday he would step down as chief executive following an independent review of his ties to the late financier and convicted sex offender Jeffrey Epstein.

While Mr. Black, whose net worth is pegged by Forbes at US$8.2-billion, will remain Apollo’s chairman, his decision to step down illustrates how doing business with Epstein weighed on the reputation of one of Wall Street’s most prominent investment firms. Black co-founded Apollo 31 years ago.

Apollo said it plans to change its corporate governance structure, doing away with shares with special voting rights that currently give Mr. Black and other co-founders effective control of the firm.

U.S. aerospace manufacturer Raytheon Technologies Corp. (RTX-N) reported better than expected quarterly profit and sales Tuesday but forecast lower than expected 2021 revenue amid a slow global economic environment triggered by disruptions from the COVID-19 pandemic.

Shares of the company rose after the company said its free cash flow could almost double to US$4.5-billion in 2021.

However, the company provided a full-year revenue outlook of about US$63.4-billion to US$65.4-billion which was below analysts’ estimate of revenue of about US$67.28-billion.

Still, the Waltham, Massachusetts-based company said it now expects 2021 full-year earnings per share to be in the range of US$3.40 per share to US$3.70 per share, beating analysts’ average expectation of US$3.47 per share, according to IBES data from Refinitiv.

On the decline

Retailer Metro Inc. (MRU-T) was lower in the wake of hiking its dividend payout to shareholders as grocery sales continue to surge during the COVID-19 pandemic.

The Montreal-based owner of grocery stores including Metro, Food Basics and Super C reported on Tuesday that its first-quarter sales grew 6.2 per cent to $4.28-billion.

Grocery sales have continued to climb at an unusual pace in an industry accustomed to much slower growth. In the 12 weeks ended Dec. 19, 2020, Metro’s food same-store sales grew by 10 per cent. Same-store sales is a key metric in retail because it tracks sales growth not affected by new store openings or closures. In the same quarter the prior year, just before the impact of COVID began to be felt in Canada, Metro’s food same-store sales grew by just 1.4 per cent.

Online food sales also continued to surge in the first quarter, growing by 170 per cent compared to the same period the prior year.

In a research note, ATB Capital Markets analyst Kenric Tyghe said: “Metro reported Q1/FY21 adjusted EPS of $0.79 versus consensus of $0.83 and our $0.80 estimate, on modestly weaker than expected revenues of $4.3-billiom, dovetailing with pandemic and labour dispute related margin pressures. While food SSSG [same-store sales growth] was strong at 10.0 per cent versus our 9.9 per cent, pharmacy SSSG was relatively weak at 1.3 per cent versus our 3.5% estimate. The weaker than expected performance in pharmacy reflected a combination of the negative impact on OTC sales of a markedly weaker than normal flu season on stay home orders, lower promotional activity and effectiveness on impulse purchases in pharmacy and a $0.05 EPS drag from the labour conflict at the Jean Coutu distribution centre.”

- Susan Krashinsky Robertson

See also: Loblaw lagging: Despite pandemic sales boost, grocery-store stocks trail rebound

Enerplus Corp. (ERF-T) erased early gains and closed down after increasing its bets on the Bakken light oil region in North Dakota through the purchase of a private rival for US$465 million.

The Calgary-based company said after th bell on Monday it has agreed to buy Bruin E&P HoldCo, LLC, which has current production of about 24,000 barrels of oil equivalent per day.

Enerplus says it will fund the purchase with a new US$400-million term loan and a $115-million (Canadian) equity financing. It says it will not assume any of Bruin’s debt.

It says most of Bruin’s production and development prospects are located in the Fort Berthold area near Enerplus’s main property.

Enerplus reported fourth-quarter production of 86,200 boepd and said that is expected to rise to an average of about 106,000 boepd in 2021 on capital spending of between $335-million and $385-million if the Bruin deal goes through by early March as expected.

Ovintiv Inc. (OVV-T) declined as Kimmeridge Energy Management Co. launched a proxy fight against it to win three seats on the oil producer’s board.

The private investment firm urged Ovintiv to alter its capital spending, focus on governance and said that the board had allowed Ovintiv to become an environmental laggard, trailing peers on key environmental metrics.

Kimmeridge owns 2.5 per cent of Ovintiv’s common shares and is one of the oil driller’s top ten shareholders.

“Despite our best efforts to engage constructively with the company, the Board was dismissive of our recommendations to help position Ovintiv as a leading E&P,” said Mark Viviano, managing partner and head of public equities at Kimmeridge.

Kimmeridge has nominated its founder Ben Dell, Cambiar Investors’ Katherine Minyard and Columbia University research scholar Erin Blanton as independent directors to Ovintiv’s board.

Earlier this month, Kimmeridge had urged Ovintiv to focus on capital allocation, management compensation issues and establishing environmental strategy.

American Express Co. (AXP-N) on Tuesday reported a 15-per-cent drop in quarterly profit as pandemic-led lockdowns and business restrictions kept the credit card issuer’s members from traveling and dining out, sending its shares down.

Still, the New-York based company beat Wall Street estimates for profit as it lowered credit loss reserves and benefited from higher online spending by consumers stuck at home.

Large credit card firms have been hit hard as the pandemic-induced recession forced companies to lay off workers, which in turn hampered overall spending. Amex said it does not expect a full-blown recovery before 2022.

“While we remain cautious about the pace of recovery, we are focused on achieving our aspiration of being back to the original EPS expectations we had for 2020 in 2022,” said Chief Executive Officer Stephen Squeri.

Overall spending by customers using AmEx cards fell 15 per cent to US$277.5-billion in the quarter, and declined 12 per cent in the United States and 19 per cent overseas. The company spent around US$2.3-billion on card member rewards, down about 16 per cent from a year earlier.

Total revenue, excluding interest expense, fell 18 per cent to US$9.35-billion, with spending on AmEx’s cards for travel and entertainment declining 65 per cent.

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After seeing big premarket gains, shares of Etsy Inc. (ETSY-Q) were lower in the wake of Tesla Inc. boss Elon Musk praising the e-commerce company in a social media post early Tuesday.

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Miner Freeport McMoRan Inc. (FCX-N), the world’s largest publicly traded copper producer, was down in the wake of narrowly beating analysts’ estimates for quarterly profit on Tuesday, as it benefited from higher gold prices, and forecast slightly higher spending budget for the year.

Unprecedented stimulus measures and low interest rates to cushion economies from the impact of the pandemic have benefited gold, which is seen as a hedge against inflation.

Freeport said it was expecting capital expenditures for 2021 to be about US$2.3-billion.

The company also benefited from higher output as production of copper rose to 864 million pounds, while gold output climbed to 273,000 ounces.

It said total costs and expenses fell 11.2 per cent to US$2.79-billion, helped by a US$1.3-billion plan unveiled last year.

Excluding items, Phoenix, Arizona-based Freeport reported a profit of 39 US cents per share, compared with analysts’ average estimate of 38 US cents per share, according to IBES data from Refinitiv.

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NextEra Energy Inc. (NEE-N), the world’s largest producer of wind and solar energy, was lower after it reported a quarterly loss compared to profit a year ago, hit by an impairment charge of US$1.2-billion on its investments in the Mountain Valley natural gas pipeline.

Mountain Valley pipeline in the United States is one of the several oil and gas pipes delayed in recent years by regulatory and legal fights with states and environmental groups that found problems with permits issued by the Trump administration.

Analysts expect the pipeline’s startup to be delayed after Virginia environmental regulators proposed changes to stream-crossing rules that would bar Mountain Valley from using the U.S. Army Corp’s proposed 2020 Nationwide Permits to cross streams.

NextEra posted a net loss of US$5-million in the three months ended Dec. 31, compared with an income of US$9750million a year ago.

Excluding the charge and other items, the company’s profit of 40 US cents per share beat analyst estimates of 37 US cents, helped by a surge in demand for renewable power generation.

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Lockheed Martin Corp. (LMT-N) fell as it reported quarterly profit below estimates on Tuesday, hurt by lower F-35 deliveries as an economic slowdown brought about by the COVID-19 pandemic dented demand for the U.S. weapons maker’s products.

The company said fourth-quarter deliveries of its F-35 jets fell 17.6 per cent from 51 jets a year earlier. The company said it now expects 2021 revenue between US$67.10-billion to US$68.50-billion, in line with analysts’ expectation of revenue of about US$68.04-billion, according to IBES data from Refinitiv.

Lockheed forecast full-year earnings for 2021 to be in the range of US$26.00 to US$26.30 per share, above analysts’ average expectation of US$26.13 per share.

Net earnings rose to US$1.79-billion, or US$6.38 per share, in the fourth quarter ended Dec. 31, from US$1.5-billion, or US$5.29 per share, a year earlier.

Analysts on average had expected net earnings of US$6.41 per share.

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With files from staff and wires

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