Top Canadian sectors and stock picks from Credit Suisse

Top Canadian sectors and stock picks from Credit Suisse

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

The Credit Suisse research team published an admirably succinct forecast for Canadian markets, including stock picks, on Wednesday:

“For 2020 YTD, the S&P/TSX Composite delivered a 2.8% capital return that significantly lagged the most common comparative of the S&P 500′s 13.4% … Canada’s COVID-19 vaccine positioning that should help the return to “more normal”… Sector Selection: The Financials sector has the greatest weight in the Canadian market and our teams have a moderate view on the outlook for banks, but a generally positive view for the alternative asset managers. For the next largest sector, Energy, there are a series of positives after a rather challenging year for producers/integrated and generally positive on Energy Infrastructure… Stock Specifics: Outperform-rated stocks include: (a) Banks: Royal Bank (RY) and National Bank (NA); (b) Life Insurance: Sun Life Financial (SLF); (c) Consumer: Canada Goose (GOOS), Lululemon Athletica (LULU) and Restaurant Brands International (QSR); (d) Energy: Canadian Natural Resources (CNQ); (e) Energy Infrastructure: Keyera (KEY); (f) Forest Products: Mercer International (MERC); (g) Gold: Newmont (NEM); Barrick (GOLD); and, Endeavour Mining (EDV); (h) Industrials: Brookfield Business Partners (BBU); Thomson Reuters (TRI); Canadian Pacific Railway (CP); Canadian National Railway (CNR); and, Magna International (MGA); (i) Infrastructure: TransAlta Corp. (TA); AltaGas Ltd (ALA); and, (j) Non-bank Financials: Brookfield Asset Management (BAM).’

“@SBarlow_ROB CS: Sector and stock picks for Canada in 2021” – (research excerpt) Twitter

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BMO economist Robert Kavcic notes that debt per capita is not the same for all provinces as pandemic spending continues to break budgets,

“Provincial governments have been historically active borrowers this year, for obvious reasons, with the group on pace for nearly $171 bln of issuance in FY20/21. But, note the variations on a per-capita basis or relative to GDP. Alberta and Newfoundland & Labrador stand out as big borrowers, consistent with deeper budget shortfalls. The opposite is true for Atlantic Canada. Note that Quebec’s borrowing totals look chunkier than Ontario despite better budget metrics, partly because of borrowing on behalf of Hydro Quebec. While next fiscal year will likely see these numbers moderate, the provinces are expected to remain very active borrowers by historical standards.”

“@SBarlow_ROB BMO: Some provinces are racking up more debt than others” – (research excerpt) Twitter

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BofA Securities U.S. quantitative strategist Savita Subramanian published a list of 11 top stock picks for 2021, one per major sector,

” These stocks align with themes in our 2021 Year Ahead (Value over Growth, small over large, Cyclicals over Defensive, ESG*), plus factors such as positioning, our analysts’ 2021 earnings outlook vs. consensus and more.”

The stocks are Walt Disney co., Hilton Worldwide Holdings Inc., Walmart Inc., Chevron Corp., Allstate Corp., HCA Healthcare Inc., Alaska Air Group Inc., Qorvo Inc., Vale S.A. (ADR), Realty income Corp and NextEra Energy.

I am a big fan of Ms. Subramanian’s work generally, but investors should be aware that last year’s 11 stock picks underperformed the S&P 500 badly, by over 30 per cent.

“@SBarlow_ROB BoA: 11 stocks for 2021” – (table) Twitter

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Newsletter: “How a resistance to ESG investing is hurting your portfolio” – Globe Investor

Diversion: ” Why people still starve in an age of abundance” – M.I.T. Technology Review

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Published at Thu, 17 Dec 2020 12:42:19 +0000