Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Jefferies strategist Christopher Wood details the rise of money markets as deposits flee U.S. regional banks,
“The renewed regional bank jitters are a reminder that deposit flows out of US banks and into money market funds remain a key variable to monitor. In recent weeks there has been no decisive trend. But clearly there is a risk that outflows from banks pick up again. Following the Fed’s latest 25bp rate hike on Wednesday, the reverse repo facility will now be paying 5.05%. Remember that 39% of money market funds are invested in this facility. For the record, US commercial banks’ deposits have declined by US$960bn or 5.3% since peaking in April 2022, while small regional banks’ deposits have declined by US$247bn or 4.4% since peaking in early December. As for US money market funds’ assets, they have increased by US$794bn or 17.8% since April 2022″
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BMO chief strategist Brian Belski continues to favour dividend growth stocks and other capital deployment investment strategies,
“The S&P/TSX gained a solid 2.9% on a total return basis in April, outperforming the S&P 500. Overall, this was a low risk rally, as our low-risk factor category significantly outperformed our high-risk factor category. In fact, companies with low 5-year beta gained a solid 6.2% on average, well ahead of companies with high beta, which was down 4% on average this month. All our fundamental categories underperformed, as the market was focused on a rebound in low-risk companies … we believe investors should remain focused on capital deployment strategies, including dividend growth, cash flow, and even GARP-style strategies that blend both value and growth factors”.
Mr. Beslki made six additions to his list of dividend growth stocks – Canadian Natural Resources, Canadian Tire Corp. Ltd., Dundee Precious Metals Inc., goeasy Ltd., SSR Mining Inc. and TFI international Inc. The other outperform-rated companies that arise from his dividend growth screen are ARC Resources, Birchcliff Energy, Crescent Point Energy, Cenovus Energy, EQB Inc., Enerplus Corp., Methanex Corp., Paramount Resources, Pason Systems Inc., Prairiesky Royalty Ltd., Secure Energy Services, Stelco Holding Inc., Tourmaline Oil Corp. and Whitecap Resources.
“BMO: “Top 25 S&P/TSX stocks by highest one year growth rate in dividend per share”” – (table) Twitter
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Morgan Stanley published a special report advocating investment in global education,
“We see 3 key catalysts driving investments in the education sector: (1) Challenges/problems within education that we think global, innovative, well-managed companies are positioned to address, (2) An ~$8 trillion TAM [total addressable market] that can enable more rapid technology diffusion as institutions will be pushed to do more with less, and (3) Valuation support, with many education names trading below their 3- to 5-year NTM EV/Sales [next 12 months enterprise value to sales ratio] and EV/EBITDA [enterprise value to earnings before interest taxation depreciation and amortization] averages… For investors in public equities, we identify 7 preferred global education stocks that are rated overweight: 3P Learning (3PLAX), Arco Platform (ARCE.O), Coursera (COUR.N), IDP Education (IEL.AX), Instructure Holdings (INST.N), Prosus (PRX.AS), and YDUQS (YDUQ3.SA)”.
“MS likes global education stocks” – (research excerpt) Twitter
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Diversion: “Eight descendants of Secretariat will compete in this week’s Kentucky Derby” – Bloomberg
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