Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
BofA Securities analyst Pinaki Das provided a list of stock ideas based on the firm’s most promising investing themes.
BoA has previously isolated more than 20 transformational market and economic themes, and this list features related stocks where the firms’ analysts have price targets and profit estimates the most above the consensus average.
The list, in order of attractiveness, includes Rockwell Automation Inc., Netflix Inc., Hewlett Packard, Eaton Corp. PLC, Sonos Inc., Proofpoint Inc., Mimecast Ltd., HDFC Bank, Twitter Inc. and LM Ericsson.
" @SBarlow_ROB BoA’s most out of consensus stock picks related to transformational themes” – (table of long and short ideas) Twitter
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The scarcely believeable hack of social media site Parler in recent days is yet another reminder of the importance of network security.
Morgan Stanley’s survey of corporate chief information officers (CIOs) found that spending on security software is again to rise (my emphasis),
“We think spend growth is likely to accelerate in 2021, particularly in areas such as Identity Management, Endpoint Security, and Security Analytics. Top picks include PANW, SAIL, CYBR, SPLK ... Security Remains a Top Priority for CIOs, as growing Public Cloud adoption and a more distributed workforce has increased complexity and significantly expanded the cyberattack surface area for enterprises. Even prior to the “SolarStorm” cyberattack last month, security was tied for the area of largest spend category in 2020, driven by companies rapidly shifting their security architecture to align with the new work from home environment … Identity Management and Endpoint Remain Top Security Priorities in 2021 with CIOs selecting the two categories for largest spend increases within security budgets. With an increasingly remote workforce, we expect Identity and Access Management to become more central to security architectures, benefiting vendors such as Okta. SailPoint and CyberArk”
“@SBarlow_ROB MS: Top picks in security software sector” – (research excerpt) Twitter
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BMO chief economist Doug Porter sees the North American employment situation as “glass half full,”
“Both of the North American December jobs reports came in a bit light of expectations with moderate declines. But bigger picture, as shown by the chart, the setbacks were just not in the same league as the harrowing declines last spring. In fact, the U.S. employment rate managed to stay steady in the month, and excluding the hospitality sector job growth actually picked up a bit. Still, in both economies, the employment rate remains well down from pre-pandemic levels. Compared to a year earlier, Canada’s rate is still down 2.5 ppts while the U.S. is down a heavier 3.6 ppts since then. The relatively firmer Canadian figure—despite a deeper GDP drop— likely reflects the boost from the payroll subsidy program (CEWS)”
“@SBarlow_ROB BMO chief economist Doug Porter sees the North American employment situation as ‘glass half full’ – (research excerpt, chart) Twitter
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Citi strategist Chris Montagu does not view recent market volatility as a major concern for investors yet,
“The selloff does not put immediate pressure on recent long positions in US equities. Critical levels for potential long liquidation [levels that if broken to downside would signal significant further weakness] are 3,700 for SPX and 12,500 for NDX… Equities started strongly in 2021 with US and European equities up 2% and 3% respectively, partly on expectations of continued monetary and fiscal stimulus supporting risk assets. The value rally is also continuing though signs are that this represents a rebalancing of shorts and underweights rather than an outright rotation from any other style factor exposures… optimism flew in the face of rising COVID-19 cases, wider economic lockdowns, disturbing scenes in US politics and below consensus US jobs numbers. Rising real yields pose another threat to long positions in equity markets. The prospects of continued low real yields, coupled with the prospect of rising break-evens/inflation expectations is driving a lot of the Q1 thesis for US equities”
“@SBarlow_ROB Citi: Recent volatility does not threaten bull thesis yet” – (research excerpt) Twitter
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Newsletter: “Five reasons Investors Need to Protect Portfolios from Inflation” – Globe Investor
Diversion: “It’s essential to understand why some health care workers are putting off vaccination” – Vox
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Scott Barlow