Top picks, earnings review for utilities and energy infrastructure from a Scotiabank analyst

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

Earnings review

Scotiabank analyst Robert Hope reviewed earnings for the utilities and energy infrastructure sectors and provided top picks,

“On balance, Q3 results were in line with our expectations, but there were some sizable beats and misses that drove outsized share price reactions. Following the quarter, consensus estimates moved up for the utility group and down for the remainder of our coverage subsectors. ACO.X-T, ALA-T, and AQN-N saw the most meaningful positive estimate revisions, while GEI-T, NPI-T, and TWM-T saw the largest declines. We prefer the power names, followed by the gas-levered pipeline/midstream names, and then the utility group. We also note that BIP-N has some positive momentum as its double-digit FFP/unit growth outlook is becoming more clear. Our overall favourite names are ALA-T, BIP-N, CPX-T, KEY-T, PPL-T, and TA-T.”

Robotics

RBC Capital Markets analyst Tom Narayan interviewed robotics expert Aron Kisdi from robotics distributor Autodiscovery,

“Our view: In recent months, we have been fielding an increasing amount of questions on humanoid robots. Key conclusions are that: 1) humanoids will be the dominant form factor; 2) China leads in robotics hardware, whereas the US and Europe lead in robotics software; 3) The pricing model for humanoids could resemble the smartphone as opposed to a car; 4) It remains too early to determine any winners in the market, which is characterized by low barriers to entry; 5) Humanoids could be introduced to certain households in the next 5 years, but fully autonomous robots remain 20+ years away; 6) The number of robots could be in the hundreds of billions; 7) Autonomous driving capabilities may not directly scale to humanoid robots; 8) There are a wide range of potential investments in robotics and the supply chain; and 9) A winner-take-all scenario appears unlikely in the near term. It was also a discussion point in our RBC Imagine™ report this morning, titled The Great Recalibration, where we explore the disruptive forces reshaping industries, economies and societies”

Mr. Kisdi highlighted Tesla, united Robotics, Boston Dynamics, XPeng Robotics and Figure as important producers but emphasized that no company has an unassailable lead

Fund manager survey

BofA Securities investment strategist Michael Hartnett summarized the results of the firm’s monthly survey of global fund managers,

“Bottom Line: investors bullish…most OW stocks since Feb’25, most OW commodities since Sep’22, running very low 3.7 per cent cash levels (’sell signal’); FMS [fund manager survey] positioning a headwind not tailwind for risk assets, froth to correct further without Fed Dec rate cut, EM/banks most vulnerable to proper Q4 risk-off move, retail/UK assets the contrarian longs. On Macro: investors bullish on Goldilocks, 53 per cent expect soft landing (vs 37 per cent no landing, just 6 per cent hard landing); global growth expectations turn +ve (net 3 per cent) for 1st time since Dec’24; good news…53 per cent say AI already increasing productivity; bad news…1st time in 20 years investors say companies ‘overinvesting’ (read ‘slow down, hyperscalers’).

“On AA, Crowds & Risks: #1 most crowded trade = long Magnificent 7 (54 per cent), #1 tail risk = AI bubble (45 per cent), #1 credit event source = private credit (59 per cent); net 34 per cent OW global stocks (this normally closer to 60 per cent at multi-year tops); investors most bullish on EM, healthcare (most OW since Dec’22); slashed exposure to UK (most since Oct’22) and discretionary (record decline); cut tech exposure by most in 8 months.

“On the Year Ahead: respondents say best performing assets = international (42 per cent) & U.S. stocks (22 per cent), best performing equity indices = MSCI EM (37 per cent) & Nasdaq (13 per cent), best performing FX = Japanese yen (30 per cent); most bullish 2026 catalyst for investors = AI productivity gains, most bearish catalyst = inflation & Fed rate hikes. Contrarian Trades: based on Nov FMS positions: long cash-short stocks, long sterling, long FTSE-short EM, long discretionary-short banks, long energy-short healthcare.”

Bluesky post of the day

Diversion

“Silicon Valley’s Plausible Path to the Designer Baby Business—Even Though It’s Illegal" - Gizmodo