Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Quality stocks due for rally
Scotiabank strategist Jean-Michel Gauthier described the unusual domestic market conditions as investors in higher quality stocks drastically underperformed,
“Following a large-scale rout in Top Quality names in Canada vs. Bottom Quality, we revisit our Quality Tilt in Canada, but Keep Value in Mind recommendation. Overall, we believe Bottom Quality is likely near a peak in Canada, and stick to QARP [quality at a reasonable price] in the meantime … we were warming up to Canadian Quality after a disastrous 2025 for the style. The scale of Canadian Quality’s underperformance was historically severe several months in 2025, implying strong mean-reversion potential. Moreover, our top Quality basket sits near a Momentum low with Value rankings having bounced back to their second-highest levels since 2010 (i.e., Quality is not as expensive as it used to be, while overly low Momentum can lead to a reversal). We are definitely a tad early on this trade, with January bringing another poor performance for Top Canada Quality vs. Bottom Quality. However, our Value twist to our Quality recommendation helped limit damage … Overall, we would stick to our Quality with a Value twist recommendation in Canada.”
The strategist provided a list of quality at a reasonable price stocks that includes Altagas, Wisdom Gold Mines, Canadian Imperial Bank of Commerce, Peyto Exploration and Development Corp., Empire Co. Ltd., Toronto-Dominion Bank, Royal Bank of Canada, Fairfax Financial Holdings Ltd., Suncor Energy Inc., OceanaGold Corp., Keyera Corp., Bank of Nova Scotia, Primaris REIT, Athabasca Oil Corp., Bank of Montreal, and Mullen Group Ltd..
Top 30 energy stock picks
RBC Capital Markets head of global energy research Greg Pardy updated his list of top 30 stock picks in the sector,
“In January, the RBC Global Energy Best Ideas List was up 10.7 per cent sequentially compared to the iShares S&P Global Energy Sector ETF (IXC), which was up 13 per cent and a hybrid benchmark (75-per-cent IXC, 25-per-cent JXI – iShares Global Utilities ETF) that was up 10.7 per cent on a sequential basis. This month, there are no additions to or removals from the RBC Global Energy Best Ideas List”
The stocks on the list are Suncor Energy, TotalEnergies, California Resources, Chord Energy Corp., ConocoPhillips, Permian Resources, Prairiesky Royalty Ltd., Canadian Natural Resources Ltd, Ovintiv Inc., Woodside Energy, Enerflex Ltd., SLB., Altagas Ltd., Pembina Pipeline Corp., Cheniere Energy Inc., Williams Co.s Inc., EDP Renovaveis, Northland Power Inc. and Superior Plus Corp.
Small and midcap AI plays
Citi strategists introduced a new basket of stock picks identifying peripheral small and midcap plays on AI,
“The newly launched Citi Research Small/Mid Cap AI Enablers basket is trackable on Bloomberg with levels updated daily … The quantitative/process- driven basket is equally weighted of US stocks with market cap under $40-billion to end 2025 that are tagged as AI Enablers in our classification scheme. Minimum market cap as of the end of 2025 was $1-billion with average daily value traded over $25MM over the past year. The basket is heavy tilted towards Technology, specifically Hardware and Semiconductors. Power generation via Utilities and hard infrastructure with Capital Goods are sizeable, but secondary sub-themes. Factor tilts are modest, such as Value and Low Risk underweights and Earnings Momentum and Growth overweights. Citi Research Buy-rated stocks in the basket include: SNDK, MCHP, CCI, KEYS, TER, CIEN, COHR, NRG, HPE, ALAB, PSTG, LITE, SBAC, MTZ, NVT, and SYM (High Risk)”
Bluesky post of the day
JPM: ".. we remain firmly bullishly convicted in gold .. on the back of a clean, structural, continued diversification trend that has further to run .. ".. we now forecast enough demand from central banks and investors this year to ultimately push gold prices to $6,300/oz by year end .." $GLD
— Carl Quintanilla (@carlquintanilla.bsky.social) February 2, 2026 at 8:23 AM
Diversion
“Banning lead in gas worked: The proof is in our hair” - Phys.org