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

CIBC real estate analyst Dean Wilkinson sees 25 per cent upside potential in the domestic retail REIT sector.

“We found that retail-centric REIT valuations are reflecting a much worse outcome than that which is likely to prevail (note that current valuations are sitting at similar levels). The valuation optionality within the sub-sector is significant, with a reversion to historical levels [on a price to net asset value, price to funds from operations or yield basis) implying an approximate price return of ~25%.”

Mr. Wilkinson’s current top picks in the subsector are RioCan REIT, SmartCentres REIT, and First Capital REIT. For more risk-averse investors, he recommends Choice Properties REIT, CT REIT and Crombie REIT.

“@SBarlow_ROB CIBC’s top picks in retail REITs” – (research excerpt) Twitter

" @SBarlow_ROB CM: Implied upside for Cdn retail REITs” – (charts) Twitter


National Bank has released its monthly report on the domestic housing market and sees signs of a slowdown.

“Last month’s advance in the Composite index was the lowest for a month of June since 2004… the number of sales pairs (“the price increase observed between two sales of the same property”) from which June indexes were derived was the lowest for a month of June since 2001… a low level of sales pairs was recorded in all the 11 metropolitan areas comprised in the Composite index. Also, June marks the second monthly decline in a row of the seasonally adjusted raw Composite index. The raw index declined in June in six of the 11 metropolitan areas. True, According to CREA, overall Canadian home sales returned to a more normal level … We expect the Canadian unemployment rate to remain elevated for a while. In this context, demand for housing may decrease due to a reduction in immigration and would-be first-time homebuyers not being able to qualify for a mortgage loan. That said, the homeownership rate is low among workers in sectors hardest hit by COVID19.”

“@SBarlow_ROB NBF: “Confirmation of housing-market slowdown due to COVID-19” – (research excerpt) Twitter


Morgan Stanley global strategist Andrew Sheets has been among the most bullish pundits, but now, even though his 12-month outlook remains constructive, he sees trouble ahead for investors in the short term,

“The calendar becomes challenging: i) A looming US presidential election; ii) Worsening trends for COVID-19; iii) The moderating of an exceptional run of positive economic surprises; and iv) Worse seasonality for stocks and credit… Since 1990, the worst 60-day stretch for the S&P 500 has been July 31-September 28 … If August and September contain a number of risks, they’re also notable for the lack of potential positive events. We’ve been trying (believe us) to think of positive surprises over this two-month stretch. We’re coming up empty.”

Mr. Sheets recommends portfolio cash balances and reducing equity volatility in the very short term. The research report is entitled “Danger Zone” so it does appear the strategist has some conviction here.

" @SBarlow_ROB MS: “Positive catalysts in the rear-view mirror”' – (research excerpt) Twitter


Bank of America sees big upside in Google’s Youtube business,

“A more detailed look at YouTube subscription businesses, we see an $18bn+ 2025 revenue opportunity. Cord cutting, shift to subscription services and leverage of YouTube brand key growth drivers. We estimate $88bn in potential 2025 valuation vs $26bn today, an $90/share value creation opportunity; Maintain Buy.”

“@SBarlow_ROB BoA on Youtube: “We estimate $88bn in potential 2025 valuation vs $26bn today, an $90/share value creation opportunity”' – (research excerpt) Twitter


Newsletter: “”Regret is one of the biggest hurdles in investing” – Globe Investor

Diversion: “How Long does COVID-19 Immunity Last?” – The Atlantic

Tweet of the Day: “@C_Barraud 🇺🇸 🇯🇵 Four U.S. #Tech Giants Worth More Than Entire #Japan Market – Bloomberg *Apple, Microsoft, Amazon and Alphabet Inc. were worth $5.97T as of Monday, versus $5.84T for all Japanese stocks, according to data compiled by Bloomberg.” – Twitter

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