Daily roundup of research and analysis from the The Globe and Mail’s market strategist Scott Barlow
RBC Capital Markets analyst Pammi Bir published a look ahead to 2025 for REITs and emphasized four top picks,
“Chartwell Retirement Residences (CSH.UN-T); Solid momentum in fundamentals. Trifecta of significant operational improvements, new construction starts at nine year lows, and demographic tailwind has laid the groundwork for a multi-year runway of solid organic NOI [net operating income] growth. ... Over $1-billion of recently announced acquisitions that high-grade the portfolio via newer vintage, higher-rent growth assets, while expanding scale in existing markets. Sector-leading earnings growth. 14-per-cent 2024-26 estimated FFOPU CAGR [funds from operations per unit compound annual growth rate] … Anticipated reduction in leverage … Dream Industrial REIT (DIR.UN-T): Organic growth set to accelerate… Combined with easing new supply, we expect SP [same property] NOI growth to shift to higher gear in 2025. Levers to drive earnings and value upside. Good progress on development leasing, with active projects totaling $340-million at healthy 6.5-per-cent target yields. Exploring new opportunities to create value (e.g., powered land for data centres). Above-average growth, yet discounted valuation. Units trade at 25 per cent below NAV … Boardwalk REIT (BEI.UN-T): Bull Case: Positive interprovincial migration albeit at lower pace. Less exposure to Non Permanent Resident outflows. Relative affordable markets. Expected positive mid-single-digit growth in lease spreads. Not like 2014 – new-built rent materially > in-place rent. Attractive valuation – 6-per-cent implied cap rate, $190K/suite. 2025E FFO growth of 6 per cent … Killam Apartment REIT (KMP.UN-T): Bull Case: Positive interprovincial migration albeit at lower pace. Less exposure to Non Permanent Resident outflows. Relative affordable markets. Renewal spreads strong even if new lease spread growth moderates. Attractive valuation – 6-per-cent implied cap rate, $200K/suite. 2025E FFO growth of 6 per cent”
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Scotiabank analyst Ovais Habib expects significant profit margin growth for precious metals miners,
“With gold reaching a new all-time closing high of $2,790/oz during the quarter and averaging $2,661/oz (up 7 per cent quarter-over-quarter), we expect to see margin expansion of 21 per cent on average over Q3/24 across our producer coverage universe as higher precious metal prices could more than offset higher royalties, stronger FX, and cost inflation. Our EPS estimates are above consensus forecasts for DPM, KNT, and TXG, and below consensus for CGAU, EDV, and SSRM, among others. Our top producer picks continue to be AGI, MAG, NGD, OGC, and PAAS … We expect consolidation to continue in 2025, with heightened M&A activity enabling companies to optimize their asset portfolios to seek out the best production, cost, and jurisdictional profile.”
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Citi analyst Daniel Tobon offers a glimmer of hope for the loonie,
“We expect a noisy period of headlines trying to predict what policy Trump will enact; however, we recommend ignoring these headlines as ultimately what will drive the USD is the path Trump chooses to take on tariffs and trade in the coming weeks. Our base case (and we think the market base case) is hawkish rhetoric at the start of his term that could provide another 1-2-per-cent upside in the USD – but we would use that to take profit on our USD longs as actual policy will be more moderate. There is significant risk of early tariffs that surprise the market though, which also makes holding USDs attractive. Less likely is an immediate shift to more moderate tariff language by Trump; but should that be seen, we would flip short USD especially against high beta FX like AU”
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Diversion: “The 8 Upcoming Stephen King Adaptations We’re Most Excited to See” – Gizmodo