Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Scotiabank analyst Robert Hope has published a report outlining his current top picks in the pipeline and energy infrastructure sector,
“Since mid-August, returns have been driven by valuation expansion of the renewable stocks and compression in the pipeline/midstream space. We expect these trends to persist in the near term… Renewable valuations have expanded ~2[approximately two times]x since the start of Q3 and are near all-time highs, driven by ESG funds flows, growth expectations, and low interest rates. We increasingly are fielding questions on clean power and it appears that many investors are looking to increase their renewables allocation… We prefer a defensive positioning going into the US election given the potential volatility surrounding the event. Of the utilities, we see significant room for valuation expansion with ALA. The eventual sale of Mountain Valley Pipeline (which is inching toward construction) would improve the balance sheet; after this we see investor focus turning to the attractive utility growth profile. ENB is our favourite pipeline/ midstream name as we expect the valuation discount versus TRP to narrow as progress is made on the Line 3 Replacement project. Of the renewables we prefer BLX due to its strong financial position, low payout and attractive growth prospects.”
“@SBarlow_ROB Scotia: Top picks in Canadian pipelines and energy infrastructure” – (research excerpt) Twitter
Morgan Stanley published a list of their top thematic stock picks going into earnings season. This is the most interesting list I’ve seen recently in part because most of the usual FANG suspects aren’t there.
The stocks are: Boyd Gaming Corp., Capri Holdings Ltd., Education Technology Co., Chegg Inc., Crown Castle International Inc., Enterprise Products Partners LP, Evercore Inc., Fifth Third Bancorp, Horizon Therapeutics PLC, Inphi Corp., Microsoft Corp., Mondelez International Inc., Plug Power Inc., Proctor & Gamble Co., Seagate Technology PLC and video game publisher Zynga Inc.
“@SBarlow_ROB MS” Top thematic stock picks into earnings season" – (table) Twitter
BMO economist Robert Kavcic provided a good summary of the major changes happening in the Canadian housing market,
"Single-detached home prices across Canada’s major market are up 7.2% since March (or almost 15% annualized), while condo prices have stagnated… The pandemic has created a desire for more space … Work-from-home has opened up a broader market now … for condo prices, multis have made up the vast majority of new supply over the past 15 years, so the market isn’t nearly as tight. Investors who bought condos recently were relying on price growth, strong rent growth, and/or short-term rentals to make the economics work—those factors have all changed'
"@SBarlow_ROB BMO on Cdn housing market: “Just give me more space"” – (research excerpt, chart) Twitter
Column: “TSX stocks with the most rapidly improving profit outlooks” – Globe Investor
Diversion: “Room-temperature superconductivity has been achieved for the first time” – M.I.T. Technology Review
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