Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
From vehicles, smartphones and workplaces, software increasing drives everything we do and this trend shows no signs of stopping. Citi analyst Walter Pritchard provided his top three and bottom three stock picks in the software sector in a Monday report,
“DOCU: Market leader in uncrowded eSignature space. Modeling inputs appear conservative (net expansion, customer growth) especially with potential tailwinds from accelerated move of business processes to digital. NICE: We see Cloud growth maintaining accelerated growth rate and more than offsetting license declines on the back of more urgent CCaaS demand with WFH / SIP. NOW: Significant core and adjacent market opportunities drive sustained above market growth with balance of margin expansion … Bottom 3 Rankings: FSLY: Bull case in “edge cloud” appears too early to offset risk on large CDN exposure where margins and multiples are much lower. Semi-recurring revenue at risk post-COVID-19. FTNT: Company is focusing on its investments in security appliances/hardware-based adjacencies during time market is transitioning to cloud (and moving away from deployment). SCWX: Expecting undistinguished growth with lagging margins on the back of the challenging trends in managed security services.”
“@SBarlow_ROB Top software picks for 2021 from Citi” – (table) Twitter
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Scotiabank’s Phil Hardy highlighted record equity mutual fund sales in Canada in November,
“Equity Funds net sales in November were the strongest ever recorded coming in at $3.8B, comfortably ahead of the previous high mark of $2.8B recorded in February 2017. This was mainly driven by Global Equity, which posted record net inflows, and U.S. Equities which experienced its strongest net sales since February 2015. Meanwhile, Domestic Equity remained in net redemptions for a 45th consecutive month but flows improved m/m and y/y… Fixed income net inflows were the weakest since March 2020, and decreased to $250M following seven consecutive months of net inflows that have averaged $2.1B … ETFs: Sequential improvement in net creations was mainly driven by Equity, which almost doubled m/m, and Fixed Income which rebounded from a very weak month of October. Passive ETFs recorded net issuances of $2.6B, were up 121% from October 2020, but weakened 32% from November 2019. Active ETFs net creations were $256M for the month and decreased 31% m/m and 22% y/y.”
“@SBarlow_ROB BNS: Record Canadian equity mutual fund sales in November” – (research excerpt) Twitter
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Ritholtz Wealth Management’s Michael Batnick is starting a portfolio management game in January that looks like fun,
“I was never a big fan of paper trading. My thinking went, it’s impossible to simulate how you feel when real money is on the line … Another reason I didn’t love paper trading is that the simulated portfolios were never any good. There wasn’t a slick piece of technology where you could simulate the feel of buying and selling and building your own portfolio. Now there is.
“Wealthbase is a simulated trading app that allows you to buy, sell, and, heaven forbid, short stocks in a paper portfolio. I’m excited to share that Josh, Ben, and I will be doing a simulated trading game in January, which will last the whole month. No money is on the line. There is no cost to join. The only thing we have to offer is fun, competition, and the chance for new investors to learn to crawl before they learn to walk.”
“You’ve Gotta Learn to Crawl Before You Learn To Walk” – Irrelevant Investor
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Diversion: “Could Carbon Dioxide Be Turned Into Jet Fuel?” – Wired
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Scott Barlow