BMO’s Top 15 North American income stock list sees four changes

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

RBC Capital Markets analyst Sam Crittenden assesses the copper mining stocks after a rally in the commodity price,

“Equity valuations have risen, coming closer to historical averages: North American copper equities under coverage are up 14 per cent year-to-date, significantly outperforming the LME copper price up 4 per cent despite materially underperforming in Q1. As a result, the equities are trading closer to historical valuations at 0.8 times NAVPS [net asset value per share] at spot (1.0 times at RBC estimates), 5.6 times NTM [next 12-month] EBITDA vs. 10Y average of 0.8 times NAVPS and 5.7 times NTM [next 12 months] EBITDA. We estimate our large producers under coverage will generate 0-per-cent FCF/EV yield in 2025 (3 per cent in 2026) and intermediate producers to generate 5-per-cent FCF/EV in 2025 (10 per cent in 2026) at spot. We see an attractive set-up for selected equities ahead of our positive medium-term outlook. Preferred names: Hudbay as they continue to demonstrate strong FCF and de-risk Copper World, Capstone as they execute on a production and FCF inflection, while any progress in Panama could be positive for First Quantum”

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BMO strategist Brian Belski updated performance on the Top 15 North Amrrican Income picks. He emphasizes they should not be looked at as a portfolio, but the best ideas of BMO analysts. There were four recent changes to the list – Essex Property Trust and Evergy were added at the expense of BXP and NiSource.

The 15 stocks are AbbVie (ABBV), Amgen (AMGN), Brookfield Infrastructure Partners (BIP), Canadian Natural Res. (CNQ), Cenovus Energy (CVE), Emera (EMA), Essex Property (ESS), Entergy (ETR), Evergy, Inc., Manulife Financial (MFC), National Bank (NA), Pembina Pipeline Income Fund (PPL), Restaurant Brands Intl (QSR), Rogers Comm. (RCI.B) and Royal Bank (RY).

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National Bank chief economist and strategist Stéfane Marion thinks the federal government should make small steps to “make Canada investable again”,

“The lesson for Canada’s economic strategy is clear: Ottawa must keep its eye on the ball by focusing on high-probability policy plays, rather than concentrating solely on rare moonshots. Such high-probability measures include streamlining regulation, accelerating project approvals, providing clear and bankable incentives for private capital, and investing in foundational infrastructure … This work is part of our broader vision to Make Canada Investable Again (MCIA)—an effort to close Canada’s persistent valuation gap, rebuild industrial competitiveness, and re-attract long-term private capital”

“Canada’s RBI Playbook: Base Hits to Make Canada Investable Again: #1” - National Bank Economics

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Bluesky post of the day:

Diversion: “Late-Night Cheese May Fuel Nightmares – New Study Explains How” – SciTechDaily