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

RBC analyst Bish Koziol published an interesting exercise by posting the top S&P/TSX stocks by value, growth, momentum.

For value, the top picks are Cogeco Communications Inc., Baytex Energy, Crescent Point Energy, Linamar Corp, Suncor Energy, Magna International, iA Financial, Pason Systems, Quebecor, Canadian Western Bank, Bank of Nova Scotia, Equitable Group, Laurentian Bank, Teck Resources and Enerplus.

For growth, Quebecor, Intact Financial, Equitable Group, BRP Inc., Stella-Jones, Open Text Corp., Canadian Natural Resources, Enerplus Corp., Cenovus Energy and TFI International Inc.

The top 10 stocks for momentum are Secure Energy Services, Badger Daylighting, Celestica Inc., Fairfax Financial Holdings, Stella-Jones Inc., Stantec Inc., Cameco Corp., Loblaw Companies Ltd., AtkinsRéalis and Constellation Software.

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BMO Capital Markets published Best of BMO Q1/24 which provides economist, strategist and analyst perspectives for the remainder of 2024. Chief investment strategist Brian Belski argued that “Canada is the contrarian call in 2024,″

“As growth begins to re-accelerate in the second half of 2024, we believe the pessimism that persists in Canada will turn to optimism, driving a long-overdue valuation expansion into the end of the year. Overall, while our initial target was not reached in 2023, we believe the rebound we expected for the Canadian stock market was only just delayed as investors digested the impact of higher rates on the Canadian consumer … We believe the TSX can and will attain higher prices with a 2024 year-end price target of 23,500 on earnings of $1,500. This represents a 12-per-cent return based on January close and a multiple improvement to 15.7 times from the current level below 14 times … We believe as U.S. equity market performance broadens out through 2024 as expected and investor confidence improves from the current dreadful levels, such trends will benefit Canadian equity performance. In fact, the TSX has been highly correlated to the S&P 500 excluding these mega-cap names, suggesting to us that broadening U.S. performance equals a stronger TSX”

Mr. Belski is overweight domestic Communications Services, Consumer Discretionary, Financials, and Information Technology.

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Citi strategist Dirk Willer looks at the Magnificent Seven, some of which are not trading well lately, and wonders if the market rally is set to end,

“Two of the magnificent seven are trading meaningfully below the 200dma, and a third one is not too far away. This has raised concerns that the rally may come to a premature end, as the stock market Generals are starting to fail. We compare the situation to the 2000 bubble and find that this is not yet a sufficient reason to worry. We also note that this time around the Generals are more tech-heavy than in 2000, which suggests that at the eventual end of the bubble, the SPX would likely benefit much less from a move out of tech and into other sectors than it did in the middle of 2000 … For the SPX, only one of the largest market cap names trades below [ the 200 day moving average]. Three is a warning sign, in our view. — Taking the 2000 bubble as a template, we are currently not at warning levels yet. For NDX [Nasdaq 100] , we are currently at two; four signaled the end of the bull market — Again using the 2000 bubble, we are also not at levels that signal the end of the up move.

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BofA Securities investment strategist Michael Hartnett’s weekly Flow Show report almost always contains interesting, if frequently bearish, observations,

“Zeitgeist: “$6tn to $7tn in money market funds and all of it getting 5% in interest…maybe that’s what giving everyone the confidence to go speculate”. March 10th 2000: Nasdaq bubble peaked; note that semiconductors relative to S&P500 hit the highest level since Mar’00 over the past few days … my American wife was once asked “what’s the best thing about living in London?”…she replied “Paris”; today: what’s the best thing about stocks?…bonds … 2024: abnormal times, abnormal gains…stocks ferocious +25% in 5 months has happened just 10 times since 1930s, normally such surges occur from recession lows (1938, 1975, 1982, 2009, 2020) or start of bubbles (Jan’99 ); stretched & extended we are (semis 36% & NDX 16% >200dma, Mag 7 trailing PE 45x…) but A Short History of Bubbles shows it can go further”

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Diversion: “Oscar Predictions: Who Will Win and Should Win at the 2024 Academy Awards” – The Ringer (podcast)

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