Skip to main content

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

CIBC REIT analyst Dean Wilkerson published his monthly report on the sector that included his top picks,

“Our overarching view of the real estate complex remains unchanged: we believe that the sector, en masse, carries significant valuation optionality and with few exceptions, sustainable yields, an attractive combination that sets up well for above-average returns over the longer term … We continue to favour those REITs that carry relatively lower valuation risk, above-average yield, and strong balance sheets, including BPY, REI, SRU, FCR, APR, KMP, GRT, WIR, and AP… we recently teamed up with our strategy group to explore how quantitatively based approaches might drive outperformance in the real estate space. Our findings suggest that NAV, FFO, and dividend growth are powerful metrics”

Story continues below advertisement

“@SBarlow_ROB CIBC: Top picks in the REIT sector” – (research excerpt) Twitter

***

TD economist Brian DePratto noted a slowdown in consumer spending growth in the Monday research report “An Update on Canadian Spending Patterns”

“Aggregated TD spending data can provide valuable, timely insights on Canadian spending patterns. As August progressed, spending growth has remained in positive territory, but the earlier uptrend has given way to a flatter growth pattern. Total spending was up 0.6% in the week ended August 21 and has averaged about 1% y/y on a trailing four-week basis ... A brighter spot in the data was business spending . After lagging for some time, this category, while more volatile, appears to be trending modestly higher, outpacing personal spending growth for a second time in the week ending August 21 …

“@SBarlow_ROB TD: “Slowdown in Canadian consumer spending recovery [by sector]” – (chart) Twitter

***

Warren Buffett celebrated his 90th birthday over the weekend by disclosing new holdings in Japanese equities,

Story continues below advertisement

“Japan’s five major trading houses — Mitsubishi Corp, Mitsui & Co, Sumitomo, Itochu and Marubeni — fit the bill in terms of being cheaply valued, having been hit hard by the global pandemic and collapse in commodity prices earlier this year. The Sage of Omaha has disclosed a $6.3bn investment in the quintet, and signalled he will upsize it… About a fifth of the Japanese trading houses’ profits are gleaned from cyclical commodities and resource-related operations … The contrarian approach is one of building stakes in companies and sectors that are cheaply valued and with scope to benefit from a world of higher inflation and central bank control of interest rates.”

“Buffett’s Japan investment is a bet on inflation and volatility” – Financial Times (paywall)

“Warren Buffett’s big bet on Japan could turn on higher inflation, weakening U.S. dollar” - Globe Investor

***

The Financial Times’ (free to read with registration) Alphaville site has an ongoing series of articles called “This is nuts, when’s the crash” that details trading in assets with stretched valuations. Tesla Inc., which writer Jamie Powell calls a ‘dot-comedy stock’,

“Famous scientist once quipped “I can calculate the motions of the planets, but I cannot calculate the madness of men” after losing a small fortune during the South Sea Bubble. Today, FT Alphaville is having the same thoughts about Tesla, the $463bn electric carmaker whose valuation has become unhinged from economic reality… On Monday alone, the stock rose 12.6 per cent, seemingly on the fact of a 5-for-1 stock split. In market cap terms, that’s a $51bn move -- or an entire General Motors, plus some change. In 2019, General Motors shipped 7.7m cars. Tesla? Just over 360,000. In the past 12 months, GM has recorded $8.3bn of ebitda versus $3.5bn for Tesla… it’s plain old dumb to be discussing fundamentals here when Tesla, with just $800m of free cash flow over the past twelve months, is valued higher than Johnson & Johnson ($17.5bn of free cash flow), Walmart (23bn of free cash flow), and Visa ($11.5bn of free cash flow). Dot-comedy, it seems, has returned to the market.’

Story continues below advertisement

“Tesla is nuts, will it ever crash?” – FT Alphaville

***

Diversion: “The FAA Cleared Amazon’s Drone Fleet, So We’re a Step Closer to Commerce Hell’ – Gizmodo

Tweet of the Day:

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies