Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
BMO chief investment strategist Brian Belski reported that the stocks from his dividend growth screen were the only group he tracks that outperformed the S&P/TSX Composite in August. The screening process for the outperforming dividend growth list is, “we screen the S&P/TSX each January, April, July, and October based on the following parameters: Dividend yield greater than 0, Free cash flow yield greater than dividend yield; and Dividend payout ratio less than the S&P/TSX Composite”
The “outperform”-rated stocks on the dividend growth list are Alimentation Couche-Tard, Boardwalk REIT, Boyd Group Services, CCL industries, Colliers international Group, Canadian Pacific Kansas City Ltd., Constellation Software, Cenovus Energy, Dollarama, BRP Inc., Enerplus Corp., First Quantum Minerals, IA Financial Corp., Imperial Oil, Linamar Corp., Methanex Corp., Nutrien Ltd., Pason Systems, Parex Resources, Secure Energy Services, Stantec inc., Tricon Residential Inc., Waste Connections Inc., Whitecap Resources, West Fraser Timber Co. and Sleep Country Canada Holdings.
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BofA Securities investment strategist Michael Hartnett’s weekly Flow Show report is out,
“Oil at 10-month high: a. US days of crude oil supply (incl SPR [strategic petroleum reserve]) down to 46 days, 40 year low, b. Saudi/Russia production cuts, c. demand strong (India & China restock with discounted Russian crude, China imports from Russia up 50 per cent past 18 months); upward pressure on CPI from energy + Saudis no longer recycling oil revenues into USTs … financial conditions getting tighter, ‘higher yields = harder landing’ … big bull market on ‘nearshoring’ theme, U.S. importing more from Mexico than China for 1st time since ‘03 … SPX earnings yield 4.6 per cent minus T-bill yield 5.5 per cent = negative 90 basis points, lowest since 2000; when EY [earnings yield] towers over T-bill yield (Mar’03 = 550bps, Mar’09 = 1000bps, Mar’20 = 700 ) max bullish time for stocks & credit; when gap negative (Aug’00 = -250bps) or low (Jul’07 = 80bps) not so great for stocks and credit”
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The Morgan Stanley North American mining team predict a major capital expenditure boom that will directly benefit a Canadian stock,
“U.S. reliance on import critical minerals has reached a 30-year high, and investment in the industry is near its lowest point in decades. The US government has identified 50 minerals it deems critical to the U.S. economy and to national security; for 43 of those critical minerals, more than 50 per cent of domestic consumption depends on imports … For U.S. policymakers, the U.S.’s mineral dependence on imports highlights the growing vulnerability of the U.S. mineral supply chain and the urgent need to strengthen domestic supply chains. In addition, the U.S. faces a multi-decade decline in investment in the domestic mining and exploration industry, which has fallen from approximately 2.0 per cent of GDP in 1960 (and a peak of 3.1 per cent in 1981) to just 0.5 per cent today … From a sustainability perspective, onshoring has the benefit of better oversight around the Environmental, Social, and Governance pillars, in our view … The most likely beneficiary, in our view, of policy reform and new investment into the US mineral industry will be the Junior Mining and Exploration industry … Among our U.S. Metals & Mining coverage, the positive impact of mining reform will be somewhat limited in the near future, but we highlight Freeport-McMoRan (FCX.N), Teck Resources (TECK.N), and MP Materials (MP.N) as potential beneficiaries”
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Diversion: “CDC Warns About Deadly ‘Flesh-Eating’ Bacteria Found in Warm Coastal Waters” – Gizmodo