Barlow’s Research Roundup: A David Rosenberg ETF recommendation that makes perfect sense

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

Infrastructure ETF

Rosenberg Research, economist David Rosenberg’s firm, recommended an ETF with undeniable attractiveness,

“We see the AI-driven industrial buildout facing growing backlash from local politics, especially around energy and water usage. At the same time, investment in power generation and engineering services is becoming a key bottleneck for the stretched capex commitments of the Big Tech giants. We are pivoting toward this area, which we think is highly likely to gain more traction in the next (though mature) leg of AI-driven sector themes. We are adding the iShares U.S. Power Infrastructure ETF (POWR), building a 4.7-per-cent weight in the portfolio”.

Mixed Gold Outlook

RBC Capital Markets analyst Josh Wolfson published a mixed outlook for gold equities,

“The near-term outlook is glass half full / empty, depending on your framing. We see a mixed reporting season ahead. The good: 2Q results represent a seasonally weaker operating period, although consensus estimates appear reasonable and better results are forecast in 2H; producers are meaningfully net cash, plus are generating high margins and FCF; management decision-making remains grounded and companies are continuing to return record volumes of capital; valuations are still reasonable at spot (Sr. producer P/NAV of 1.12 times, 2027 EV/EBITDA of 6.1 times and FCF/EV of 7.0 per cent; royalties P/NAV of 1.65 times, EV/EBITDA of 17.4 times, and FCF/EV: 4.0 per cent). The bad: Consensus estimates are elevated and at risk of downward revisions; Margins are compressing on both rising costs and declining gold prices in 2Q, and potentially go-forward with rising inflationary pressures; momentum has clearly waned as generalist investors have reduced sector exposure, magnifying the impact of reactions where execution does not meet expectations; declining gold prices present less-predictable headwinds for earnings, most notably on provisional pricing and working capital outflows”

Power shortage

BofA Securities analyst Andrew Obin’s in-depth research on U.S. power demand uncovers specific beneficiaries and investment opportunities,

“We believe the US could face an electricity generation shortfall of 100+ gigawatts (GW) between 2026-30. Our analysis combines the BofA semiconductor team’s chip forecasts with recent trends in US demand. The result suggests 230+ GW of capacity demand. This is well above the BofA US utilities team’s forecast for 93 GW of accredited supply from regulated utilities. With demand well above supply, we see the gap being filled through a combination of on-site power generation, working existing on-grid assets longer, adding batteries, and demand destruction. Within our coverage, we view Buy-rated GE Vernova (GEV), Eaton (ETN), Emerson (EMR), and INNIO (INIO) as beneficiaries”

Bluesky post of the day

Diversion

“New Research Could Help Break China’s Rare Earth Magnet Monopoly” - SciTechDaily