Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
There are six new companies in BMO chief strategist Brian Belski’s Canadian dividend growth list, which screens the domestic universe for dividend yields above zero, free cash flow greater than the dividend yield and dividend payout ratio below the S&P/TSX Composite average.
The stocks on the list are (new additions in bold) Alamos Gold, Inc., ARC Resources Ltd., Alimentation Couche-Tard, Inc. Boardwalk Real Estate Investment Trust, Baytex Energy Corp., Boyd Group Services, Inc., Cogeco Communications Inc., CCL Industries Inc., Cameco Corp., Canadian Pacific Kansas City Ltd., Constellation Software Inc., Cenovus Energy Inc., Dollarama Inc., BRP Inc., Dundee Precious Metals Inc., Empire co. Ltd., Enerplus Corp., First Quantum Minerals Ltd., FirstService Corp., Gildan Activewear Inc., Imperial Oil Ltd., Loblaw Cos. Ltd., Metro Inc., MTY Food Group Inc., Methanex Corp., OceanaGold Corp., Pet Valu Holdings Ltd., Pason Systems Inc., Richelieu Hardware Ltd., Russel Metals Inc., SSR Mining Inc., Stantec Inc., Suncor Energy Inc., TransAlta Corp., Tricon Residential Inc., TFI International Inc., Spin Master Corp., Vermilion Energy Inc., Waste Connections Inc., George Weston ltd. Winpak Ltd. and WSP Global, Inc.
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Citi U.S. strategist Drew Pettit launched a new recommended list called the Thematic 30,
“Top Themes for 2024 — Six of ~40 thematic portfolios stand out based on our operating leverage emphasis. These include Artificial Intelligence, Digital Leisure, Experiential Commerce, FinTech, Infrastructure/Fossil Fuels, and Internet-Driven Business Models. Each of these groups include US stocks with at least $2B in market cap, and high theme-exposure ratings based on Citi’s Global Theme Machine. Launching the Thematic 30 — The initial composition of the Citi US Thematic 30 recommended list includes select Buy-rated names from our top themes, each of which is projected to see EBITDA and/or earnings growth in excess of sales growth. We expect the Thematic 30 to have a high beta and will be periodically updated alongside our ongoing thematic coverage”
The stocks are Amazon.com, Alphabet, Meta Platforms, AECOM, Edison International, Chart Industries, Martin Marietta Materials, NOV, United Airlines Holdings, Carnival, DoorDash, Uber Technologies, Godaddy, AppLovin, Draft Kings, Roblox, Unity Software, Wix.com, Docusign, Equinix, HubSpot, Stride, Q2 Holdings, Squarespace, Wayfair, Fiserv, Global Payments, Mastercard, PayPal Holdings, and SS&C Technologies.
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Also from BMO, chief economist Doug Porter explains the reason for early-year market volatility,
“Markets ended 2023 in a headlong rush to price in early and often rate cuts by the Fed, but also from the Bank of Canada and the ECB. While we wouldn’t quite call it a hangover, the first week of 2024 saw a more—shall we say?—sober reassessment of rate cut prospects. For example, after probing the 4.2-per-cent level in the middle of last week, the two-year Treasury yield briefly popped back above 4.4 per cent … Interrupting the market’s parade to rate cuts were some solid economic results, some sticky inflation data, and a stern reminder from the FOMC Minutes. Topping that list was plenty of evidence that the U.S. job market remains firm, highlighted by a drop in initial claims to just 202,000 last week, and a sturdy 216,000 December payroll advance … Markets rallied on the services ISM, initially taking the 10-year yield back below 4% and more than reversing the post-payroll move, suggesting that investors are still eager to believe rate cuts are imminent. But tying the loose threads of the economic releases in a bow, the Atlanta Fed is now tracking Q4 real GDP growth of 2.5 per cent (our call is 1.0 per cent) —hardly pointing to any urgency for rate relief … And while the [Canadian] headline employment reading was soft—basically flat in December—wages are far too hot for the Bank of Canada’s comfort… At more than 2 percentage points north of current inflation, and with no productivity growth, that points to persistent inflation pressures.”
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Diversion: “Study Finds Specific Cancers Could Be Prevented by Exercise” – Gizmodo