Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
RBC Capital Markets analyst Bish Koziol made six changes to his quantitatively driven top 40 list of Canadian stocks.
ATS Corp., Teck Resources Ltd. and CGI Inc. are out, CCL Industries Inc., Suncor Energy Inc. and AGF Management Ltd. are in,
“Our Canada Overall Top 40 portfolio fell 1.6 per cent last month, though it outperformed the S&P /TSX Composite‘s 1.8-per-cent loss . Year-to -date the Portfolio advanced 6.2 per cent compared to the benchmark ‘s 4.7-per-cent rise. The performance last month was attributable to headwinds from Information Technology and Communication Services”
The list now is Imperial Oil Ltd, Pason Systems Inc., Canadian Natural Resources Ltd., Ovintiv Inc., Enerplus Corp., Trican Well Service Ltd., Suncor Energy Inc., Cenovus Energy Inc., Stella-Jones Inc., CCL Industries Inc., Labrador Iron Ore Royalty Corp., Toromont Industries Ltd., Thomson Reuters Corp., TFI International Inc., Richelieu Hardware Ltd., Finning International Inc., Ritchie Bros. Auctioneers Inc., Exchange Income Corp., Metro Inc., Loblaw Companies Ltd., North West Co. Inc., EQB Inc., Fairfax Financial Holdings Ltd., Bank of Montreal, Intact Financial Corporation, TMX Group Ltd., AGF Management Limited, Great-West Lifeco Inc., Bank of Nova Scotia, Toronto-Dominion Bank, Open Text Corp., Celestica Inc., Constellation Software Inc., Enghouse Systems Limited, Quebecor Inc., Cogeco Communications Inc., Rogers Communications Inc., Altagas Ltd. and TransAlta Ltd.
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In Monday’s newsletter, I wrote about a potential market shift from growth stocks to cyclicals, as issue the strategy team at Scotiabank tackled in a recent research report,
“Value was the star on a global basis, with Growth also performing well in April. The worst of the sell-off was concentrated in formerly high Momentum countries/sectors. Overall, the cyclical over defensive bias rises further. Energy continues to surge in rankings, with strength also evident in Industrials, Financials, and Discretionary. Defensives remain hamstrung by their dismal Growth rankings relative to other sectors. Tech’s previously rising Growth rankings seem to have stalled this earnings season, which may increase focus on their poor Value proposition. As long as macro stays supportive, a GARP approach may prove useful. Small Canada over U.S. The small Canada bias is stable, but sector preference is shifting, with only Canadian Financials and Real Estate retaining an edge over their US counterparts. Canadian Materials/Gold Miners are rising fast relative to their U.S. peers however. Canada looks great on Value, while the US dominates on Quality”
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BMO economist Shelly Kaushik published Solving the Mystery around [business] Insolvencies,
“Canadian business insolvencies pulled back in March, following an early-year surge after the deadline passed for waiving interest payments on pandemic-era loans. While the monthly data can be quite volatile, the twelve-month trend shows a clear upturn. Over that period, the largest chunk of insolvencies was in accommodation and food services (15.5% of total), construction (13.6%) and retail trade (11.1%). All three reflect discretionary spending (e.g., less renovations hitting construction), which has been struggling amid elevated interest rates”
“BMO: Solving the Mystery around [business] Insolvencies” - (chart, excerpt) X
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Diversion: “When are mental health interventions counterproductive?” – Marginal Revolution
Scott Barlow