CIBC analysts’ top picks in REITs, oil and gas

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

CIBC published a comprehensive report outlining their coverage universe and the analysts’ top picks. For energy analyst Dennis Fong, the top picks were Suncor Energy Inc. (SU-T) and Cenovus Energy Inc. (CVE-T),

“Suncor Energy Inc.: Suncor has achieved more than half of its 2024-2026 target set in its 2024 Business Update, including US$7/Bbl (70 per cent of its target) of break‑even reduction and achieving its net debt target of $8B … Cenovus Energy Inc.: With projects coming online in the next six months, we expect Cenovus could grow production to 840 MBoe/d in 2026E, from 819 MBoe/d in Q1/25. We also expect the company to further optimize its refining assets to improve market capture and reduce operating costs”

Real estate analyst Dean Wilkinson likes Brookfield Corp. (BN-T) and Flagship Communities REIT (MHC.U-T),

“Brookfield Corporation: Shares of BN have significantly outperformed over the past 12 months, but we believe current levels still represent a favorable risk/reward profile and do not fully reflect the value of BN’s best-in-class real estate platform and rapidly growing wealth solutions vertical … Flagship Communities REIT: MHC has one of the best operating leverage set‑ups in our coverage universe. While its units have materially outperformed the broader REIT sector this year, their growth may just be getting started”

Tal Woolley recommends Granite REIT (GRT.UN-T),

“Granite REIT is our top pick for industrial exposure, offering a compelling combination of stability, ample free cash flow, low leverage, and a consistent growth track record”

Energy analyst Jamie Kubik prefers stocks sensitive to LNG,

“We expect LNG Canada commissioning to be the single biggest catalyst for gas producers in years: The project will add 2.0 Bcf/d of incremental demand to the Western Canadian Sedimentary Basin (WCSB) by 2026. This will push inventories towards normalized levels and narrow Western Canadian gas differentials, leading to a revenue generation tailwind for natural gas producers … Kelt Exploration Ltd.: The stock carries a discounted valuation and outsized production per share growth compared to peers. The start-up of the CSV Albright gas plant in Q2/25 allows the company to ramp up liquids-rich production at Wembley. The company is poised to deliver significant production growth of 36% and 22% in 2025E and 2026E … NuVista Energy Ltd.: The company is on the path to hit 125 MBoe/d of production by 2028. As a pure-play Montney producer, the stock offers investors a discounted valuation, an attractive commodity mix, one of the strongest balance sheets among peers, and an attractive return of capital with the goal of returning 75% of free cash flow to shareholders through share buybacks. NuVista is positioned to benefit from an improving demand outlook for natural gas”

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RBC head of global sustainability research Sara Mahaffy published two lists of top picks on Thursday.

The first covers “fresh ideas in the Digital Security, Green Building, Grid Solutions, and Health & Wellbeing themes. These names are all still lowly owned within actively managed sustainable funds and have positive RBC Elements ESG Scores. We also have restricted to names above $1 billion market cap and profitable names (based on LTM [last 12 months] EPS).

These stocks are Netscout Systems Inc., Akamai Technologies Inc., Qualys Inc., AAON Inc., Fortinet Inc., Otis Worldwide Corp., Enersys, Bloom Energy Corp., Primoris Services Corp., Generac Holdings Inc., Mastec Inc., Atkore Inc., Organon & Co., Exelixis Inc., Lantheus Holdings Inc., Idexx Labs Inc., Bio-Rad Laboratories Inc., Neurocrine Biosciences Inc., Iqvia Holdings Inc., PTC Therapeutics Inc., Acushnet Holdings Corp., Planet Fitness Inc., Halozyme Therapeutics Inc., and West Pharmaceutical Services Inc.

The second list is fresh ideas in the Pollution & Waste, Sustainable Ag & Food, and Water themes. These names are all still lowly owned within actively managed sustainable funds and have positive RBC Elements ESG Scores. We also have restricted to names above $1 billion market cap and profitable names (based on LTM EPS). These stocks are:

Ball Corp., Ingevity Corp., Steel Dynamics Inc., LKQ Corp., Hexcel Corp., Donaldson Co. Inc., Silgan Holdings Inc., Nucor Corp., Commercial Metals, Casella Waste Sys Inc., E Aq & Food, Ingredion Inc., Sensient Technologies Corp., Vital Farms Inc., Agco Corp., Mccormick & Co. Inc., Archer-Daniels-Midland Co., Cal-Maine Foods Inc., Sysco Corp., California Water Service Group, Zorn Elkay Water Solutions Corp., H20 America, Franklin Electric Co. Inc., Hawkins Inc. and Otter Tail Corp.

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BofA Securities commodity strategist sees a potential squeeze in the copper market,

“Focusing on fundamentals, as copper has moved from China and LME warehouses to the U.S., we see the risk of a short squeeze near-term. Beyond that, there may be an air pocket in demand this autumn, particularly if a settlement of trade disputes prompts the Chinese government to dial back the stimulus that has supported metals-intensive sectors. Having said that, we see some partial offsets by a rebound of consumption in Europe into 2026, as the EU economy is set to be bottoming out. Mine supply is also a constraint, reflected in Chilean production remaining within longer-term averages; similarly, a restart of Cobre Panama next year may well be offset by supply losses at Kamoa Kakula. Hence, the red metal should push higher in 2026.”

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