RBC analyst makes four changes to his quantitatively-driven top 40 domestic stock picks list

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

RBC Capital Markets analyst Bish Koziol made four changes to his quantitatively-driven top 40 list of domestic stock picks, adding Iamgold Corp. (IMG-T) and Aecon Group Inc. (ARE-T) and removing Cenovus Energy Inc. (CVE-T) and OceanaGold Corp. (OGC-T),

“Our Canada Overall Top 40 Portfolio gained 5.3 per cent in June, outperforming the 2.9-per-cent advance in the S&P/TSX Composite. All sectors – with the exception of Information Technology – in the portfolio contributed to its gain last month with Industrials and Utilities leading the advance 9.1 per cent and 7.1 per cent respectively”.

The list as it stands now is Pason Systems Inc., Canadian Natural Resources Ltd., Trican Well Service Ltd, Paramount Resources Ltd, Suncor Energy Inc., Keyera Corp, Imperial Oil Ltd, Ovintiv Inc, Stella-Jones Inc, Silvercorp Metals Inc, Cascades Inc, lamgold Corp, CCL Industries Inc., Eldorado Gold Corp, Dundee Precious Metals Inc, Hudbay Minerals Inc, Exchange Income Corporation, Toromont Industries Ltd, Aecon Group Inc, Finning International Inc, Linamar Corporation, Magna International Inc., Saputo Inc., Loblaw Companies Ltd, Metro Inc., AGF Management Limited, Canaccord Genuity Group Inc, Bank of Nova Scotia, Great-West Lifeco Inc, iA Financial Corporation Inc, Equitable Group Inc., Canadian Imperial Bank of Com, Bank of Montreal, Fairfax Financial Holdings Ltd, Open Text Corp, Enghouse Systems Limited, Rogers Communications Inc., Quebecor Inc., and Cogeco Communications Inc.

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Goldman Sachs’ weekly Briefings report tackled the unloved nature of the current rally,

“On the latest episode of The Markets podcast, [Shawn Tuteja, who oversees exchange-traded funds (ETFs) and custom baskets volatility trading within Goldman Sachs Global Banking & Markets] says that hedge fund positioning in equities has been ‘six or seven out of ten,’ the systemic community’s position has been five out of ten, and positioning among mutual funds and larger institutions has been four or five out of ten. At this point in the rally, ‘people are unsure whether they should keep buying into it, given just how quick the rebound has been,’ Tuteja says. So what accounts for the market’s rise to record highs, given the moderate level of positioning? ‘I think that speaks to the strength of the passive flows that go into equity markets,’ Tuteja says, pointing specifically to corporate buybacks and passive retail 401(k) buying. ‘As we continue to melt higher, it’s forced professional investors to really assess: How much do I love my stocks here? How much upside is in the market?’ Tuteja says. ‘And I think that’s what people are grappling with here’”.

“Climbing the “Wall of Worry”” – (podcast) Goldman Sachs

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Scotiabank’s bullishness on Canadian equities relative to U.S. has almost disappeared,

“Neutral Canada vs. U.S. Our small pro-Canada bias that had prevailed since early 2021 has nearly disappeared, with only Canadian gold miners (Materials) and Financials still outranking their US peers. Canada’s usual strength in Value is waning, with the style at its lowest ranking since 2012. The U.S. dominates on Quality with Growth rebounding faster than in Canada … Overall, we’re seeing a large shift in rankings towards the US, especially in Tech and Discretionary. Large OW in Financials/Industrials/Communications as well as rate-sensitive Utilities/Real Estate are funded by UW in non-US Tech, Energy, and Healthcare. As discussed in our Focus 2025 Climbing to New Heights, we continue to favour a GARP approach given low Value rankings in the high Growth space”.

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Bluesky post of the day:

Diversion: “What Happened to Mars’ Water? A New Study Offers a Startling Answer” - SciTechDaily