RBC analyst picks biggest winners from national energy infrastructure plans

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

Infrastructure gains?

RBC Capital Markets analyst Maurice Choy identifies the winners from announced energy infrastructure expansion,

“The initial list of projects and strategies was shorter than the one within the unconfirmed article by the Globe & Mail published last week, with the most noticeable difference being the omission of a ‘Northwest Coast Oil Pipeline’ project. While some investors may find this disappointing, the PM noted that the development of the Pathways CCUS project may open the opportunity for a potential new crude oil pipeline, adding that under the new Bill C-5 One Canadian Economy Act, the government has the ability to take into account various factors (e.g., national interest, economic benefits) in making necessary adjustments to relevant regulations. Beyond the prospect of a new crude oil pipeline, the listed projects and strategies that were most relevant to the Canadian Energy Infrastructure sector shouldn’t come as a surprise, particularly in light of the G&M article. Stock-wise, we anticipate investors will focus on: (1) TC Energy (TRP-T), which may proceed with the next phase of Coastal GasLink should LNG Canada Phase 2 proceed; (2) Emera (EMA-T) and Hydro One (H-T), in terms of building new electricity transmission lines in Nova Scotia (to support offshore wind development) and Ontario (to support the province’s Ring of Fire and phases beyond Darlington’s first of four SMR units), respectively; and (3) ATCO (ACO.X-T), which may see a longer-term benefit from the Arctic Economic and Security Corridor, notably via ATCO Frontec

Brookfield update

Scotiabank analyst Mario Saric was at the Brookfield investor day and is bullish on Brookfield Asset Management Inc.,

“BN & BAM held the 21st Investor Day in NYC on Wednesday, with 2 hour presentations to a (seemingly) sold out Convene auditorium. We felt there was limited new info (last year = BAM HQ move), incl. intact 5-year forecast KPI CAGRs; BAM falling 1 per cent on the day may imply a hoped-for boost (it did focus on growth drivers to get to 20 per cent plus). That said, we believe BN and BAM successfully connected the past (delivered on forecasts) with the future (15-20-per-cent per share growth), noting growth rates and investment returns become easier as the business doubles in size (i.e., growing franchise scarcity). As a result, 15-per-cent-plus shareholder returns should also be easier to achieve. Insurance = next chapter of Brookfield evolution, while AI Infrastructure is the next big thing and likely Brookfield’s biggest asset class in 10 years. We still believe BN is ‘Growth’ masquerading as ‘Value’ (albeit a bit less so given YTD run), while BAM remains a compelling & unique income (our 2025E-2027E distribution CAGR of 13 per cent = top 10 per cent of Scotia coverage) and growth play (2025E-2027E DEPS CAGR or 19 per cent), with our NTM [next 12-month] 24-per-cent total return = better entry point”

Tariffs

Citi strategist Dirk Willer assesses where we’re at in terms of U.S. tariffs,

“CITI’S TAKE: The US effective tariff rate is running at only 9 per cent vs theoretical announced rates closer to 18 per cent, and US goods inflation is muted. Is the trade war over, or has it barely begun? Low realized tariff rates are likely due to a combination of two factors: 1) transshipments and 2) carveouts. If 1) is the main driver, this risks further targeted tariff changes in the long run. If 2) is the main driver, a softer trade war could be a policy objective. Limited goods inflation can be blamed on the above factors, plus 3) stockpiling and 4) lower US profit margins. We investigate all four factors. We explore US healthcare payrolls as a risk factor

Bluesky post of the day

Diversion

Diversion: “NASA Says This Martian Rock Holds Potential Signs of Life. Here’s What Must Happen Next” – Gizmodo