Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
One area of REITs, industrials, continues to enjoy tailwinds as Scotiabank analyst Himanshu Gupta reports,
“In our 2nd Annual Industrial panel we mentioned ‘Wind in the Sails.’ Today, in our 3rd annual edition, we say the positive narrative has not changed, and it remains a landlord’s market. Secular tailwinds (supply chain optimization, near-shoring, e-commerce and inventory management) are still there but partially offset by near-term headwinds (macro slowdown, higher interest rates and new supply in some markets) … Among the larger names, BEI, GRT and DIR are the top #3 names with highest earnings growth across coverage. Not surprisingly, BEI, GRT and DIR are also the top #3 unit price performers year-to-date. Time and again, we emphasize that AFFOPU [adjusted funds from operations per unit] growth is key to outperformance. Even on 2022-24E basis, both GRT and DIR screen very well and in top quartile within our coverage”.
“Scotiabank top picks in industrial REITs” – (research excerpt) Twitter
BofA Securities commodity strategist Michael Widmer views China’s economic re-opening as too weak to rescue metals prices,
“China may be slowly emerging from hibernation post its Zero Covid policy, but its economic data – especially for sectors critical for commodities demand – remains patchy. All in, the rebound is not yet strong enough for a sustained copper price rally (and the weakness in Europe and the U.S. does not help either). In China, new order/inventory ratios, a forward-looking indicator, are back at levels that imply flat copper quotations year-over-year. It’s the same story with the credit impulse, which has picked up from the lows but still highlights the selective nature of official support to the economy. Housing and the grid are the sectors that matter most for copper. While property is being pulled up by higher sales, housing starts are still contracting’
Mr. Widmer is not entirely bearish as the report headline Copper: from red hot to slow burn indicates.
“BofA Securities: China re-opening too slow to rescue metals prices’ – (research excerpt) Twitter
Goldman Sachs chief U.S. equity strategist David Kostin is bearish, advising clients to maintain defensive portfolio positioning.
Mr. Kostin is particularly concerned about deteriorating profit margins and tightening credit conditions. His overweight sectors are health care, consumer staples, energy and telecommunications services.
Goldman Sachs recommends stocks from its Stable growth basket. Stocks in the basket that are mosre likely to be of interest to Canadian investors include Home Depot Inc., Domino’s Pizza Inc., Colgate-Palmolive, Procter and Gamble Co., S&P Global Inc., Air Products and Chemicals Inc., Johnson & Johnson, Waste Management Inc., Cisco Systems Inc., Visa Inc., Automatic Data Processing Inc. and American Tower.
“GS: ‘Constituents of Stable Growth basket”” – (table) Twitter
“GS: “EPS growth and tightening credit standards”” – (Chart) Twitter
Diversion: “The 40 Best TV Finales of the 21st Century, Ranked” – The Ringer
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