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

Credit Suisse produced a list of top Canadian stock picks based on analyst outlooks for the next six-12 months.

The stocks are:

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  • Royal Bank of Canada
  • Sun Life Financial Inc.
  • Manulife Financial Corp.
  • TransAlta Corp.
  • Brookfield Asset Management Inc.
  • Keyera Corp.
  • Canadian Natural Resources Ltd.
  • Newmont Corp.
  • Goldmining Inc.
  • Endeavor Mining Corp.
  • Teck Resources Ltd.

Detail was provided for Royal Bank, “We believe RY is best positioned among the large Canadian banks for the current economic downturn as we continue to favor its superior scale, strong core deposit base, and earnings diversification and quality.” Concerning TransAlta, “TransAlta is substantially de-risked and moves into the execution phase of the investment plan in a market with less regulatory uncertainty. In our view, TA is well positioned to benefit from margin expansion from the coal-to-gas conversions”.

"@SBarlow_ROB CS: Top Canadian stock picks' – (table) Twitter

***

National Bank Financial released a report on domestic housing affordability (my emphasis),

“Housing affordability in Canada`s large urban centres improved in the second quarter of 2020 after having deteriorated in the two prior quarters. Higher incomes helped in Q2 but the largest portion of the improvement came in the form of lower interest rates…Looking ahead, the preliminary data for rates shows additional improvements in the third quarter of the year (cumulatively they are down over 70 bps). While we expect this to help affordability, home prices should remain resilient based on the latest resale market data showing record sales volumes. Homebuyers have rushed back to the market after having delayed purchases and are now being offered record-low interest rates. Once pent-up demand is exhausted, the Canadian housing market will still have to face high levels of unemployment and reduced household formation due to lower immigration.”

“@SBarlow_ROB NBF on Cdn housing affordability” – (research excerpt) Twitter

***

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BofA Securities published their monthly survey of global portfolio managers. Among the key findings…,

"58% of investors say new bull market has begun (25% in May)… “It’s not escape velocity”: 61% predict U- or W-shaped recovery vs 20% say Vshaped … “We’re paranoid tech”: long US tech most “crowded trade” of all-time (80%) … “Let’s cyclically rotate”: FMS rotation continues on macro; tech, healthcare, large cap longs trimmed, industrials @ highest overweight since Jan'18, flows to small cap & value up; but no regional rotation … "

“@SBarlow_ROB BoA fund manager survey summary” – (research excerpt) Twitter

***

Citi analyst Aakash Doshi noted that investors are piling into commodity-based investments while short term performance lags,

"Following a 6.8% gain in August, the BCOM index took a hit in September coming back from the summer lull and is now down 2.4% MTD, as global risk assets declined while the US$ found some temporary support. Even so, August estimates of commodities AUM [assets under management] surged 5.9% m/m to $604Bn, crossing the $600Bn mark for the first time on record, now more than 50% above the March 2020 trough. The strong momentum in commodities AUM may taper into 4Q as the pullback in prices and potential spike in asset market volatility damps investor sentiment for a while.'

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***

Newsletter: “Investors need to prepare for a new Age of Disorder” – Globe Investor

Diversion: “Dave Grohl has written a song for his 10-year-old nemesis” – A Journal of Musical Things

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