Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
CIBC’s Canadian REITs Monthly report focused on the confusion caused by tariffs,
“The mercurial nature of the ongoing tariff dust-up has caused nothing but confusion. Tariffs on, off, up, and down have seen benchmark bond yields in the U.S. climb over 40 bps from the announcement of wide-sweeping tariffs on President Trump’s ‘Liberation Day’ in April to then effectively round trip right back to where they started. Meanwhile, Canadian yields have increased some ~30 bps and held the line at levels our Economics team believes will prevail for the next year … The real estate sector, however, is struggling and flirting with the pandemic-induced lows of early 2020 despite considerably higher rents and occupancy levels for most asset types. With a great degree of volatility, the REIT complex is still trading, on average, at a ~15% discount to NAV, a level that has historically been quite attractive … a 50 bps reduction in the short end (our current expectation) underpins our present view that the sector is relatively discounted … Reiterating Our Top Picks: By asset class, we continue to favour seniors housing (Chartwell and Sienna) and multi-family (Killam [Canada] and BSR and Flagship [U.S.]) followed by “defensive” retail (Crombie and Choice), and in the industrial REITs, Granite. We continue to view Brookfield Corp. as a long‑term core holding”.
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Scotiabank analyst Cameron Bean remains bullish on natural gas despite recent commodity price weakness and specified the stocks most likely to benefit,
“We have refreshed our forecasts on the updated Scotiabank GBM commodity price deck and made housekeeping updates to our financial and NAV estimates. Despite the recent sell-off in the natural gas strips, the U.S.’s on-again off-again tariff announcement schedule, and the ensuing economic uncertainty, we remain enthusiastic about the North American natural gas outlook and continue to believe the bull market is here. While a handful of names have seen their multiples expand, we are sticking with our calls, as we continue to believe gas-levered names offer the best upside opportunities over the next 12+ months. Our best ideas (in alphabetical order) are AAV (best value among gas-levered names), AR (offers the best torque to gas in the U.S. space with a top-tier sales hub mix), LGN (if you can invest down cap, we believe this one offers the most growth and resource driven upside in our coverage universe), SDE (underappreciated oil growth upside), and TPZ (high margin exposure across the best assets the WCSB has to offer)”
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Apple is apparently trying to leverage the success of the F1 movie by getting even more involved with the sport according to Wells Fargo analyst Steven Cahall (although he remains underweight on Liberty Formula One stock),
“Sports Business Journal says AAPL is in talks for US F1 rights at $150-$200mm per year, which compares to ESPN’s current ’25 contract exit value of ~ $85mm. In our model, we est. a new 5-year US rights deal at a $150mm AAV for ’26-’30, with ’26 stepping up to $136mm. We think the buyside is slightly above our est., so AAPL’s bid—if contracted—would be roughly at buyside expectations and supportive of the thesis that global media rights still have solid growth ahead. Unlikely matched by a trad’l partner. We do not have insight into how AAPL values US F1 rights, but there’s clearly an audience opp’ty on the back of the F1 film (produced by Apple). Traditional Media cos, such as DIS, WBD, PARA, FOXA, CMCSA, etc., tend to view sports as rights costs vs ad + sub revs. F1 is not really seen as a sub driver, so it’s about rights cost vs ads. 24 races X 3hrs/race X 10 ads/hr X 1mm viewers = 720mm impressions p.a., which is only ~$22mm in ad sales at a $30 CPM [ cost to advertisers per 1000 online impressions]”
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Bluesky post of the day:
https://bsky.app/profile/ljkawa.bsky.social/post/3ltn2xah7rk2u
Diversion: “Cybersecurity global alarm system is breaking down” – M.I.T. Technology Review