Top North American stock picks from Barclays

Following an unusually quiet summer, the year's closing quarter is shaping up to be eventful and volatile for stocks. Despite the noise, however, North American equities on average are still in good shape, at least compared to bonds, according to Barclays.

"The near-term outlook for equity markets remains volatile, given later cycle dynamics, politics, mixed data and increased uncertainty about monetary policy," Barclays equity research team said in a report examining prospects over the remainder of the year.

"Nevertheless, our global equity strategy team sees a continued grind higher from here as relative valuations normalize, considering recession-like premiums for equities relative to bonds with no obvious recession risks."

Barclays is betting on positive earnings growth in the quarters ahead as the U.S. market attempts to stage a recovery from the longest profits recession since the financial crisis. Pressures from low commodity prices and a high U.S. dollar have eased, the authors wrote.

The report compiles the firm's best investment ideas from the U.S., Canada, and Latin America. The continent's population of equities has been culled into 47 stock picks representing the greatest "alpha-generating" prospects.

The list presents the highest-conviction recommendations from the firm's bottom-up equity analysts, while also considering the strategy team's top-down recommendations.

The group of stocks represents nearly 50-per-cent upside under ideal conditions against 20 per-cent downside risk.

Four Canadian stocks have made the cut, three of which are new additions since the list's last update in July. The new Canadian recommendations include Seven Generations Energy Ltd., Waste Connections Inc., and Goldcorp Inc.

Goldcorp is Barclays' new top pick among North American metals and mining stocks, representing a "turnaround story with relatively inexpensive valuation among its peers," the report said.

Seven Generations, meanwhile, "generates exceptional rates of return with a development inventory that could support growth to eight to 10 times the company's current size."

And the sole Canadian non-resource name – Waste Connections (formerly Progressive Waste Solutions) – is "benefiting from strong industry fundamentals and investors' hunt for reliable yield," Barclays said.

The fourth Canadian stock, which was already among Barclays top picks, is Suncor, which "remains well positioned for both the bottom of the oil price cycle and an ensuing recovery."

The remaining picks are listed below.