Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

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

BofA Securities (formerly Merrill Lynch) analyst Ebrahim Poonawala has been skeptical about the outlook for Canadian banks, but he appears to be moving towards a more mixed view in the Tuesday research report “Canadian Banks: Too soon?,”

“Consensus forecast calls for a full EPS recovery (back to 2019 levels) for the banks by 2022 or within three years. Looking at the EPS trajectory coming out of the 2008/09 great financial crisis (GFC) we note that it took four years (2011) for the group to return to pre-crisis EPS (2007) … Zero-bound interest rates (pressuring net interest margins) and the prospects of a sluggish economic recovery (pressuring loan/revenue growth) pose significant headwinds... the elevated level of consumer debt is likely to weigh on the pace of the recovery … While by no means out of the woods yet, we believe that the Canadian banks are on track to burnishing their reputation as a safe haven during periods of crisis. However, strong execution as mgmt teams look to extract operating leverage (while capitalizing on organic/M&A driven market share opportunities) will determine winners and losers. We highlight Buy-rated RBC-RY as our top idea in the group.”

Story continues below advertisement

“@SBarlow_ROB BoA: Too soon for Canadian bank stocks?” – (research excerpt) Twitter

***

The research team at RBC has released a “Global energy best ideas” list of stocks. The domestic picks are Canadian Natural Resources Ltd., Suncor Energy Inc., Tourmaline Oil Corp., Freehold Royalties Ltd., TC Energy Corp. and Parex Resources Inc.

RBC likes Repsol SA and Royal Dutch Shell PLC for global integrateds and Baker Hughes Co. for global services.

“@SBarlow_ROB RBC: Global Energy Best Ideas” – (full table) Twitter

***

BofA Securities quantitative strategist Savita Subramanian screened the largest 100 S&P 500 stocks by market capitalization to find those with the strongest price momentum. The highest ranking 15 stocks are (in order) AMD, Paypal, NVIDIA, Amazon.com Inc., Apple Inc., UPS, ServiceNow Inc., Qualcomm, Danaher, Lowe’s, Regeneron Pharmaceuticals, Thermo-Fisher, Intuitive Surgical Inc., Netflix and Facebook.

Story continues below advertisement

The strategist includes the caveat, “The data in the …tables is a screen and not a recommended list, either individually or as a group of stocks. Investors should consider the fundamentals of the companies and their own individual circumstances/objectives before making any investment decisions.” But also notes, “a 52-week high suggests longer-term trend strength with positive momentum, while a 52-week low indicates a weak longerterm trend with negative momentum.”

“SBarlow_ROB BoA: S&P 500 co.s with strongest price momentum’ – (table) Twitter

See also: “@SBarlow_ROB Nomura’s Takada: “Looking at US equity markets specifically, we think the one-way traffic of trend-following buying is likely to continue”” – (research excerpt) Twitter

***

Citi U.S. equity strategist Tobias Levkovich is concerned that profit margins have been unsustainably supported by government fiscal initiatives,

“A shift of what is typically a business expenditure [labour] to the public sector is not something that we have encountered before and may be misunderstood by the investment community. Most clients have considered the CARES Act as a measure supporting consumption activity (i.e., corporate revenues) rather than one that might have influenced the costs of goods sold line, thereby seemingly overstating operating margins… now will have to pay those rehired employees, while others may not have jobs to go back to, restraining consumer spending, given that benefits are unlikely to be as generous going forward.

Story continues below advertisement

“Hence, 2H20 earnings could be less impressive as expenses get recorded where they normally occur.”

The summary here is that profits and revenue are being supported by cost cutting in labour costs – furloughs and layoffs – and that is a temporary phenomenon.

***

Diversion: “Baby Boomers Are Experiencing Greater Cognitive Decline Than Previous Generations, Study Finds” – 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.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
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

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

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