Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Scotiabank analyst Mario Saric thinks the worst may be over for domestic office REITs,
“Quoted Class A DT asking rent was up 1 per cent quarter-over-quarter to $29.41/sf, incl. 2 per cent in Toronto (new supply reflected). Consistent with our Q3 remarks Q4 supports the notion that the worst may be behind Office (assuming no tariff-driven domestic recession) but transitioning from “no longer getting worse” to “getting better” may take another quarter or so as anecdotal discussion points (i.e., larger tenants revisiting magnitude of space given up) convert to actual data. Shorter-term, we think the data aligns with the view that any imminent Allied occupancy gains will come from Allied success rather than broader market. That said, on the margin, this print could slightly lower odds of AP Q4 occupancy gains (critical unit price catalyst). We still think CAD Office REITs can do well in 2025 should Canada deliver solid (i.e., 2 per cent plus) Real GDP growth. AP remains SO [sector outperform] , with D at SP.”
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RBC Capital Markets analyst Bish Koziol made 10 changes to his quantitatively driven list of top 40 stock picks. Barrick Gold Corp., Waste Connections Inc., Open Text Corp., Gildan Activewear Inc. and Maple Leaf Foods were added. Northland Power Inc., National Bank of Canada, Suncor Energy Inc., Bank of Nova Scotia and Canadian Natural Resources Ltd. were removed,
“Our Canada Overall Top 40 Portfolio fell 3.2 per cent last month, while the S&P/TSX Composite dropped 3.3 per cent. However, the Portfolio ended the year with a 21.9-per-cent return versus the 21.7 % advance of the benchmark. Resources and Communication Services dragged the model down in December. The addition of Barrick increased the weighting of Materials in the portfolio to 32.5 per cent”
The full list is now Pason Systems Inc., Keyera Corp, Trican Well Service Ltd, Imperial Oil Ltd, Dundee Precious Metals Inc, Alamos Gold Inc, Torex Gold Resources, Silvercorp Metals Inc, Barrick Gold Corp, Kinross Gold Corporation, Eldorado Gold CO, Agnico Eagle Mines Ltd, Stella-Jones Inc, CCL Industries Inc., Capstone Mining Corp, Hudbay Minerals Inc, Fortuna Silver Mines Inc, Exchange Income Corporation, Finning International Inc., Waste Connections Inc, Toromont Industries Ltd, Linamar Corporation, Gildan Activewear Inc, Metro Inc., Loblaw Companies Ltd, Maple Leaf Foods Inc, AGF Management Limited, iA Financial Corporation, CIBC, Great-West Lifeco, Intact Financial Corporation, TMX Group Ltd, Canaccord Genuity Group, Fairfax Financial Holdings Ltd, Celestica Inc, Open Text Corp, Cogeco Communications Inc, Rogers Communications Inc. and Quebecor, Inc.
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In a separate Scotiabank report, strategist Hugo Ste-Marie warned clients to keep an eye on rising U.S. bond yields,
“Despite solid gains in 2024 and the Fed-induced volatility experienced in December, we still see plenty of reasons to stay bullish on stocks in 2025. We don’t want to rehash our 2025 outlook, but we do believe a strong U.S. economy (rising earnings) and more monetary easing (BoC/Fed/ECB) could further support risk assets this year. Furthermore, streaks of 10%+ returns are more common than one might think.
“In the short run, January will be catalyst rich, with the upcoming Trump inauguration (tax cuts? tariffs?), the start of the Q4 reporting season, and Fed and BoC monetary policy meetings, among others.
“In addition, we’re keeping an eye on U.S. 10-year bond yields (4.68%) as a sustained move above 5 per cent could be negative for the economy and equities (valuations), in our opinion”
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Diversion: “Yellowstone’s Legendary ‘Queen of the Wolves’ Killed by Rival Pack” – Gizmodo