Barlow’s Research Roundup: Top REIT picks, sector review from a Scotiabank analyst

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

‘Boomers and Consumers’ theme outperforms

CIBC analyst Dean Wilkinson reviewed REIT results for April and reiterated top picks in his Canadian REITs Monthly report,

“The recent rebound in REIT pricing has resulted in +280 bps of outperformance vs. the TSX, with most of it coming after the FCR acquisition announcement. Through mid-April, TSX REITs (which excludes seniors housing) had outperformed the TSX by up 30 basis points. After the $9.4-billion shot in the arm from the FCR acquisition announcement, this outperformance has increased to up 280 bps. The sector now trades at a 10-per-cent discount to NAV, with FFO [funds from operations] multiples that are approaching longer-term averages … Underperforming names may be a place to scour for M&A: residential REITs have underperformed YTD (down 390 basis points vs. the TSX, and down 670 basis points vs. the REITs). … Our ‘Boomers and Consumers’ theme leads our fundamental analysis, and the performance has followed. The ‘Consumers,’ a.k.a the Retail REITs, were already strongly outperforming prior to the FCR announcement, up 450 bps vs. the TSX and up 420 bps vs. all REITs. The deal helped drive that outperformance even higher: up 810 bps vs. the TSX and up 530 bps vs. all REITs. The Boomers, a.k.a. Seniors Housing, continues to outperform the TSX as well, up 280 bps, and that performance does not yet benefit from the significant re-rating of EXE … We continue to favour Seniors Housing (SIA, CSH, EXE) and Retail (PMZ, CHP, REI). We remain more selective in Residential, with KMP our preferred domestic name, with GO and MHC in the U.S. GRT is our preferred large‑cap choice in Industrial”

CU target raised

Scotiabank analyst Robert Hope reviews results in the energy infrastructure sector and raises price target on Canadian Utilities,

“Canadian Utilities (CU) Q1/26 results were slightly ahead of our estimate and consensus, while ATCO’s (ACO.X) results were also ahead of our estimate but in line with consensus expectations. The earnings calls highlighted a strengthening utility growth outlook longer-term … Our estimates do not materially move. However, to reflect the stronger and longer growth outlook we increase our target multiple for CU to 18.0 times from 17.0 times, which moves our target to $50.00 from $48.00. This also drives our ACO target higher to $70.00 from $67.00. We see CU trading at 17.7 times 2028E P/E, compared to Emera at 17.8 times, and a discount to Fortis at 18.6x, and Hydro One at 24.3 times. Our $50.00 target price is predicated on an 18.0x 2028E P/E, which is a discount to Emera at 19.5 times, Fortis at 19.5 times, and Hydro One at 22.0 times. We see ATCO trading at a 19-per-cent discount to our estimated NAV, versus the long-term average of 27 per cent.”

No more trade deficit

BMO senior economist Shelly Kaushik highlighted the Iran effects on the domestic trade deficit,

“Canada’s trade balance improved more than expected in March, returning to surplus for the first time since September 2025. An increase in exports was clearly driven by the Iran war, as energy prices spiked while gold responded to yet another increase in uncertainty (even though those prices slipped). The trade data can be volatile even in normal times, and the current era is anything but. Hence, the three-month smoothing in the accompanying chart—although that necessarily softens the impact of the war (so far). Still, the impact of precious metals and energy exports is noticeable, with each more than doubling (in annualized terms) over the first three months of the year. Without those two categories, the rest of Canada’s exports have been effectively flat—underscoring tariff-related headwinds, especially in sectors like autos, lumber, and other metals (i.e., steel, aluminum, copper). While the duration of the war is uncertain, Canada’s trade balance is expected to keep benefitting at least as long as traffic through the Strait of Hormuz remains restricted. Even so, weaker global demand and the ongoing trade war continue to be significant sources of uncertainty”

Bluesky post of the day

Diversion

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