Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Survey results, domestic banks
Scotiabank strategist Hugo Ste-Marie’s survey of domestic and global fund managers uncovered mixed views on Canadian banks,
“A large rally in bank stocks, and record high valuation, has left investors very divided on the sector. 42 per cent of investors polled are taking profits and reducing their exposure vs 58 per cent reported no meaningful change in exposure. Notably, no one reported increasing their bank allocation. We note that based on recent discussions, many investors indicated not selling due to a lack of obvious opportunities elsewhere in the CDA equity market. This reinforces our view that more upside potential lies ahead for banks: rising earnings often trump valuation concerns.”
Small cap top picks
RBC global equity team updated their small cap conviction list,
“The Canadian Small Cap Conviction List consists of 17 of RBC Capital Markets research analysts’ highest-conviction names with market capitalizations of approximately $2-billion or less at the time of their addition to the list. We expect constituents of our Canadian Small Cap Conviction List, which span a wide array of sectors, to deliver strong absolute returns …Additions: None. Deletions: Doman Building Materials Group Ltd. (DBM), Pet Valu Holdings Ltd. (PET), Maintains: Cargojet Inc. (CJT), Cascades Inc. (CAS), Chorus Aviation Inc. (CHR), Cineplex Inc. (CGX), Coveo Solutions Inc. (CVO), DRI Healthcare Trust (DHT.UT), D2L, Inc. (DTOL), Enerflex Ltd. (EFX), Mining Ventures Corp. (GMIN), Interfor Corporation (IFP), Jamieson Wellness Inc. (JWEL), Major Drilling Group (MDI), Osisko Development Corp. (ODV), Primaris REIT (PMZ.UT), StorageVault Canada Inc. (SVI), Trisura Group Ltd. (TSU) and WELL Health Technologies Corp. (WELL)”
Data centre pushback
Morgan Stanley analyst Michelle Weaver believes community pushback against data centres will benefit stocks representing on-site power generation,
“Readers will recall that we cited AI-related capex as a growth driver underpinning our economic outlook back in May; MS estimates AI capex at $877 billion in 2026. We are seeing local communities push back — via legislation, moratoriums, etc. — on the data center build-out, which raises the question: Does this type of opposition limit the extent to which the US can build out its AI infrastructure? An estimated $156 billion of projects were cancelled or delayed in 2025, and $130 billion already in 1Q26 … We believe opposition will put upward pressure on costs and timelines, contributing to project dispersion across the U.S., as the country remains the priority region for U.S. developers. From an equity market standpoint, data centers are likely to increasingly adopt onsite generation, benefiting SEI, INIO, and BE, all rated OW, while publicly traded colocation data center REITs, including OW-rated EQIX and EW-rated DLR, should remain relatively insulated from political pushback given their smaller scale versus neoclouds or hyperscale owned AI training data centers and their role as society’s critical infrastructure. From a macro standpoint, within credit, sustained data center pushback could ultimately extend the cycle and reduce future supply by lowering capex and financing needs, but near term capex front loading may worsen alreadybuilding issuance pressure, especially given the AI ecosystem has driven nearly all of this year’s incremental corporate supply”.
Diversion
“How Much Would You Pay for Taylor Swift’s Garbage and Why Isn’t It $0?” - Gizmodo