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Daily roundup of reserch and analysis from The Globe and Mail’s market strategist Scott Barlow

BofA Secutities has done something interesting I haven’t seen before.

Technical analyst Stephen Suttmeier applied his discipline to the broad research team’s top 10 fundamentally based investment ideas for the first quarter,

“The 1Q Buys are Carrier Global (CARR), Citigroup (C), CNH Industrial (CNHI), CrowdStrike (CRWD), Lamb Weston (LW), Occidental (OXY), Rexford Industrial (REXR), ViacomCBS (VIAC) and Xcel Energy (XEL). The 1Q Underperform is AutoZone (AZO). This Thematic Stock Charts report highlights the technicals for these stocks … Bullish technical chart patterns and/or setups entering 1Q 2022 for CARR (Bullish consolidation favors 65-66), CNHI (Big base count at 22), OXY (Bullish potential to 37-40 next) and XEL (Could test 72-73 to 76.44). Improving patterns for C (Tactical push above 67.82-69.68 needed) and LW (Big rally means bullish turn watch). Pullback in uptrend for REXR (Correction in bullish trend). More challenging setups for CRWD (A bearish pennant an early 2022 risk) and VIAC (Challenged below 37.32-38.43).”

This approach –finding investment ideas first and then assessing the technical setup – is close to my own personal method.

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Scotiabank analyst Meny Grauman assesses Canadian bank stocks for profitability,

“Over the past couple of years it has been harder to consistently achieve as revenue growth has been more challenging to come by and all banks have come under additional pressure to invest more heavily in their digital capabilities … cost pressures will remain something that banks have to continue to contend with, exacerbated by an even further acceleration in digitization as well as rising inflation that doesn’t appear to be very temporary … The large Canadian banks are almost all guiding to positive operating leverage in F2022 . Although they will achieve this in part through ingrained cost discipline, it is underpinned by a very bullish outlook for revenue growth. At the heart of this positive revenue outlook is the prospect of multiple rate hikes on both sides of the border, but to a lesser extent it is also based an expected acceleration in loan growth as the post-pandemic economic recovery continues to take hold … Taking a look at the individual names, RY is now at the top of our pecking order in part because we believe that the market is underestimating just how big a focus expense control will be for this bank in F2022. Although RY’s expense growth was impressive in F2021 at just -0.4% excluding variable compensation, the bank continues to reference its zero-based budgeting framework and its belief that its expense management efforts can continue to improve. Turning to another name, we downgraded BMO to Sector Perform from Sector Outperform when the company announced its Bank of the West acquisition in mid-December, but it is important to note that this downgrade was directly tied to uncertainty revolving around the size of the equity raise that bank will need to finance this transaction”

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Morgan Stanley analyst Katy Huberty surveyed chief investment officers on technology spending and provided a list of subsequent top beneficiaries,

“Expectations for software spending growth in 2022 remain ahead of historical levels, refuting the notion of a pull forward in demand in CY21[ calendar year 2021]. CIOs expect software spending growth of +5.0% in 2022, compared to the 10-year average of +4.5% before 2020 and +4.9% average in CY17-CY19. The second flash for CIO’s 2022 spending growth expectations remains inline with 2021 spending growth at +5.0%, suggesting CIOs foresee current spending levels sustaining. Secular growth trends underpinned by software remain top of mind for CIOs, with cloud computing, security software and digital transformation remaining in the top 3 of the priority list. With [enterprise value]/CY23 multiples contracting -26% on average across the software space since the peak in November, and survey data suggesting a robust backdrop for software demand in 2022, we see opportunities in our coverage among marquee franchises offering resilient business models poised to benefit from secular tailwinds: Microsoft (Cloud Computing and Security), Salesforce (Front Office and Digital Transformation), ServiceNow (Workflow Automation and Digital Transformation). Additionally, within software the Security data points saw the biggest incremental uptick in our Q4 survey, bolstering our conviction in Palo Alto Networks and Okta.”

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Diversion: " How Beer and Drugs Empowered an Ancient Andean Empire” – Gizmodo

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