RBC quantitative analyst makes 10 changes to Top 40 list of Canadian stocks

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

10 changes to top picks at RBC

RBC Capital Markets analyst Bish Koziol’s list of top 40 domestic stocks is based on quantitative assessment of value, momentum, growth and predictability. Today’s monthly update featured 10 changes.

Alamos Gold Inc., Ovintiv Inc., Open Text Corp., Metro Inc. and Ag Growth International Inc. were added.

Nuvista Energy Ltd., Methanex Corp., Gildan Activewear Inc., George Weston Ltd. and Canaccord Genuity Group Inc. were removed.

Also from the update, “Our Canada Overall Top 40 Portfolio gained 2.6 per cent in October, versus the 1.0-per-cent rise in the S&P/TSX Composite. Year-to-date, the model has advanced 43.7 per cent, compared to the 25.1-per-cent return for the Benchmark. Industrials led the advance amongst sectors with a 9.67-per-cent gain. All sells this month realized worsening overall QuaDS scores on generally worsening scores in Value, Growth and Predictability”

There appears to be an error in the report as only 35 of the 40 names are displayed. They are Ovintiv Inc., Canadian Natural Resources Ltd, Trican Well Service Ltd, Pason Systems Inc., Suncor Energy Inc., Cascades Inc, Alamos Gold Inc, CCL Industries Inc., Centerra Gold Inc., Hudbay Minerals Inc, Stella Jones Inc, Eldorado Gold Corp, Silvercorp Metals Inc, Ag Growth International Inc, Exchange Income Corporation, Toromont Industries Ltd, Aecon Group Inc, Russel Metals Inc, Magna International Inc., Linamar Corporation, Metro Inc., Loblaw Companies Ltd, AGF Management Limited, Fairfax Financial Holdings Ltd, iA Financial Corporation Inc., CIBC, Great-West Lifeco Inc, Bank of Nova Scotia, Equitable Group Inc., Open Text Corp, Enqhouse Systems Limited, Rogers Communications Inc., Cogeco Communications Inc, Quebecor, Inc. and Northland Power Inc.

U.S./China relations still tense

Morgan Stanley investment strategist Monica Guerra is the firm’s policy expert. She published a new report on U.S./China relations late yesterday and here are some conclusions from the research department’s summary,

“While a full economic decoupling remains unlikely, both the US and China appear to be on a decoupling path in the strategic areas of semiconductors and rare earth elements. Rare earths, essential to both civilian and military technologies, remain heavily concentrated in China, pushing the U.S. to accelerate efforts to onshore production through a variety of policy actions. We acknowledge that onshoring of REE supply chains will take time and face structural challenges, not least the location of reserves. In the near term, stocks of rare earth miners may be volatile and driven by trade headlines, though we view them as both a thematic play on U.S. onshoring as well as a downside hedge for flare ups in U.S.-China tensions or changes to the recent export control agreements. That said, we prefer a diversified exposure to rare earth miners through exchange-traded funds with a special focus on countries likely to benefit from strategic US partnerships”

Investing Zeitgeist

BofA Securities investment strategist Michael Hartnett’s weekly Flow Show report is probably the most entertaining of all regular reports even if it’s usually too bearish,

“Zeitgeist: “Crystal clear that for now market can’t handle higher yields and U.S. dollar.” Zeitgeist: “You know Fed will be buying AI hyperscaler bonds when they next do QE.” Zeitgeist: “Elections have consequences, so maybe affordability anger on Main St telling Wall St you can’t run it hot, that higher stocks may mean lower votes.” The Biggest Picture: Trump approval rating 43 per cent (41 per cent on economy, 36 per cent on inflation); politically imperative in ’26 that inflation and budget deficits under control… U.S. political risks = weak US dollar = long China & EM. The Price is Right: so long as credit spreads, banks, broker-dealers don’t break bad … asset allocators likely to ignore recent “peak” easy financial conditions “tell” from crypto, gold, subprime tech; still PE & BDCs can’t shake “krunchy kredit” fear & bulls never want to see IPOs underwater”

Bluesky post of the day

Diversion

My favourite podcast, The Watch, had a long interview with Vince Gilligan regarding his new show. Pod is here