Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Four banks could increase payout
RBC Capital Markets analyst Darko Mihelic previewed earnings for the major domestic banks,
“We lower our Q4/25 stage 3 (impaired) provision for credit loss (PCL) ratio assumptions, increase our core net interest margin (NIM) estimates, lower our capital markets forecasts on average and make other modest individual bank adjustments. We continue to expect muted loan growth but expect tractors and deposit mix shifts to provide upside to core NIMs. We believe all large Canadian banks we cover (except NA) can report results stronger than the most recent consensus view. In our view, BMO and BNS are the most likely large Canadian banks we cover to provide better than expected 2026 PCL ratio guidance during Q4/25 reporting, which could result in positive core EPS revisions. Our core EPS estimates increase by ~2% on average for the large Canadian banks we cover heading into the quarter, mostly due to lower impaired PCL ratio and higher core NIM estimates on average versus our prior estimates. On average, we expect core EPS to decrease ~3% QoQ but increase ~24% YoY in Q4/25 … All the large Canadian banks we cover are actively buying back shares and capital levels remain strong in our view; in 2024 CM and TD were the only large Canadian banks we cover to repurchase shares … Based on historical dividend cadences, we expect the following banks to declare common share dividend increases in Q4/25: BMO – BMO has historically declared dividend increases every Q2 and Q4 and we expect the bank to continue with this cadence. We model a 3-cent increase in its quarterly dividend. CM – CM began declaring dividend increases on an annual basis every Q4 since 2024. We anticipate CM to declare a 2-cent increase in its quarterly dividend this quarter. NA – NA’s historical dividend cadence was semi-annually every Q2 and Q4; we expect a 3-cent increase in its quarterly dividend. TD – TD historically declared dividend increases annually in Q4. We assume TD will announce a 3-cent increase in its dividend this quarter”
Non-AI stock picks
BofA Securities chief U.S. equity and quantitative strategist Savita Subramanian looked for stock opportunities outside of AI,
“The market has been so focused on owning companies benefitting from AI investment - from semiconductors to power plants to hyperscalers to certain capital goods names - that the conversation may be missing other opportunities. We thought it would be useful to highlight companies that aren’t generally considered direct AI beneficiaries but which our analysts find to be compelling. Some of these stocks, like Freeport-McMoRan, do have indirect exposure to AI but stocks we selected are not trading like companies directly exposed and the AI exposure may be overshadowed by other concerns … We screened the universe of Buy-rated US stocks for those that are not included in AI/power/infrastructure ETFs. We looked for positive 3-month EPS revisions and stocks trading below the market multiple of 26x. We also looked for stocks at least 10% below their 52W highs. This produced 82 stocks. We shared this screen with our analysts to better understand where conviction was highest and whether there were other stocks that the screen may have missed for one reason or another and which made more sense to include. Our final list includes 16 equities”.
The stocks are Amcor (AMCR-N), AT&T (T-N), BGC Group (BGC-N), Church and Dwight (CHD-N), Dollar General (DG-N), Eversource (ES-N), Freeport-McMoran (FCX-N), Henry Schein (HSIC-Q), J.B. Hunt (JBHT-Q), KeyCorp (Key-N), McCormick (MKC-N), OneOk (OKE-N), Progressive (PGR-N), Regency Centers Corp (REG-Q), Viking (VIK-N) and Walt Disney Co (DIS-N).
TKsubhed
Morgan Stanley strategist Michelle Weaver sees signs that AI adoption is translating into higher profit growth for specific firms,
“The share of companies citing quantifiable benefits from AI adoption related to cost and revenue has been steadily increasing based on our systematic analysis. In 3Q25, 24% of companies identified as “adopters” by our analysts mentioned quantitative impact(s), up from 21% in 2Q25 and 15% in 3Q24. For the broader S&P 500, 15% of members mentioned measurable benefit(s), up from 14% in 2Q25 and 11% in 3Q24. AI adoption is a driver of our US Equity Strategy view that we will see a broadening in leadership over the next 6-12 months & positive operating leverage. Valuation differences vs. 1999-2000: FCF yield ~3x higher today; fwd. P/E adjusted for margins ~35% lower today; top 10 weights trade 13-turns lower today”
The list of companies claiming higher margins from AI mostly entails stocks rarely owned in domestic portfolios. Exceptions include Procter & Gamble (PG-N), The Estee Lauder Companies (EL-N), Moody’s Corp (MCO-N), Walmart Inc. (WMT-N), Johnson Controls International (JCI-N), Colgate-Palmolive (CL-N) and IQVIA (IQV-N).
Diversion
Diversion: “Everything We “Know” About Vikings May Be Wrong, According to Scholars” - SciTechDaily