Barlow’s Research Roundup: RBC analyst provides praise and top picks in regulated utilities sector

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

Utilities

RBC Capital Markets analyst Maurice Choy applauds domestic regulated utilities for providing steady, low-risk profits and provides top picks in the sector,

“As the world continues to evolve, we like that the Canadian Regulated Utilities have continued to deliver on their strategic priorities, as evidenced by the Q1/26 results, the reaffirmation of their multi-year capex plans, and the maintenance of key growth themes. Indeed, affordability remains top of mind for many (if not all) stakeholders, and we remain wary of rate cases that are either outstanding or scheduled to be filed this year. Still, the micro-level steps taken recently by the utilities to derisk their businesses and advance growth initiatives are commendable and should not go unnoticed despite daily macro and AI/tech headlines. Ultimately, this quiet grind will benefit shareholders through the continuation of the sector’s predictable, low-risk earnings. Stock-wise, like certain energy infrastructure peers, the Canadian regulated utilities’ valuation is elevated, which we attribute to the now longer runway of growth ahead, plus the attractiveness of their defensive characteristics. Against this backdrop, profitable stock selections require finding bankable themes, and accordingly, we continue to favour Brookfield Infrastructure (unique capital recycling strategy), AltaGas (exposure to the WCSB, including its prolific LPG export platform), and Emera (derisking story with favourable Florida utilities)”

U.S. picks

BofA Securities US1 list is a set of stock picks chosen by committee from all buy-rated stocks at the company. The committee added Centene Corp and removed Cigna Group in a Wednesday report.

The list now consists of Spotify Technology, Burlington Stores, Viking Holdings Ltd., Walmart Inc., Williams Co.s inc., Progressive Corp., Renaissance Holdings Ltd., Visa Inc., JP Morgan Chase, Ares Management Corp., Argenx SE (ADR), Merck & Co. Inc., Northrup Grumman Corp., RTX Corp., ITT Inc., Ametek Inc., Fedex Corp, CH Robinson Worldwide, Nvidia Corp., Apple Inc., LAM Research Corp., Microsoft Corp., Cisco Systems Inc., Corning Inc., Packaging Corp of America Welltower Inc., American Healthcare REIT, Public Service Enterprise GP, and Centene Corp.

Resources

National Bank economist and strategist Stefan Marion identified gold, not oil, as the primary driver of the loonie currently,

“Washington and Tehran’s announcement [Monday] that serious discussions are underway to reopen the Strait of Hormuz has sent WTI sharply lower to around US$90 today, raising an obvious question for a currency still widely treated as a petro-dollar: should the CAD be under pressure? The answer is less straightforward than the oil move alone suggests. Canada’s exchange rate has not been trading like a pure crude proxy in recent months, and today’s price action reinforces that point. As today’s Hot Chart shows, the rolling correlation between daily moves in the loonie, measured as USD per CAD, and WTI has turned negative in recent months, a clear break from the strongly positive relationship that prevailed during the previous oil shock in 2022, while the correlation with bullion has strengthened sharply and now exceeds even the link with Canada-U.S. 2-year yield spreads. That matters because the currency signal is no longer being transmitted mainly through energy. If lower oil reflects a fading geopolitical supply premium rather than a deterioration in global demand, the terms-of-trade shock for Canada will be more limited. At the same time, gold’s rally is doing more of the heavy lifting for CAD, especially when bullion is up roughly US$50 today and markets are still pricing geopolitical uncertainty rather than a clean return to normal. The loonie’s resilience is therefore not a contradiction but a rotation in its commodity anchor. Oil still matters for Canada, but in the current market configuration, gold appears to be the more relevant marginal driver, helping explain why CAD is appreciating even as crude retreats.

Bluesky post of the day

Diversion

“The Deadly Tapeworm Spreading Across America Has Reached the Pacific Northwest” - SciTechDaily