Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
RBC Capital Markets analyst Bish Koziol made ten changes to the Top 40 domestic stock pick list.
Exchange Income Corp., Ovintiv Inc., Bank of Montreal, Richelieu Hardware Ltd. and Rogers Communications Inc. were removed in favour of Silvercorp Metals Inc., Dundee Precious Metals Inc., Torex Gold Resources Inc., Agnico Eagle Mines Ltd. and Eldorado Gold Corp.
The list is now Trican Well Service Ltd, Canadian Natural Resources, Keyera Corp, Pason Systems, Imperial Oil Ltd, Suncor Energy, Cenovus Energy, Stella-Jones Inc, Silvercorp Metals Inc, Alamos Gold Inc, Kinross Gold Corp, Dundee Precious Metals Inc, Torex Gold Resources Inc, Agnico Eagle Mines Ltd, Eldorado Gold Corp, CCC Industries Inc, Finning International Inc., TFI International Inc, Toromont Industries Ltd, Linamar Corp, Metro, Inc., Loblaw Companies Ltd, Fairfax Financial Holdings, AGF Management Limited CIBC, Great-West Lifeco, Cannacord Genuity Group, Intact Financial Corp, iA Financial Corporation Inc, TMX Group Ltd, Cl Financial Corp, Bank of Nova Scotia, National Bank Of Canada, Celestica Inc, Open Text Corp., Cogeco Communications, Ouebecor Inc., Northland Power Inc. and TransAlta Corp.
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BMO chief investment strategist Brian Belski raised his 2024 target on the S&P/TSX Composite,
“We are adjusting our S&P/TSX price target by 4% to 25,500 from 24,500 to reflect steadily improving earnings confidence and associated valuation expansion. While the S&P/TSX frankly exhibited skeptical earnings trends and sluggish price performance for most of the first half of the year, the index snapped out of its malaise in style. The TSX gained a solid 9.7% in the third quarter, outpacing the S&P 500 by over 4%, marking the strongest outperformance for Canada since the first quarter of 2022. Yes, the Canadian catch-up trade we have been calling for since the start of the year has finally arrived, and we believe will likely persist well into 2025. As such, we are raising our 2024 year-end price target to reflect the key tailwinds of returning equity flows, broadening equity performance and the clearly improving earnings environment in Canada. We are not increasing our 2024 EPS target, given the bottoming of revision trends are more supportive of 2025 EPS. As such, our 2024 implied P/E ratio increases to 17.0x from 16.3x, which is now just in line with the long-term average multiple”
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Goldman Sachs asset allocation specialist to Christian Mueller-Glissmann thinks investors should continue to buy dips in U.S. equity markets,
“The downdraft in stock markets in August, when US equities dropped 8% from the highs the previous month, may have been a warning shot, according to Christian Mueller-Glissmann of Goldman Sachs Research. While markets have recovered since, the speed and reasons for the drop signal that the macroeconomic backdrop is becoming more fragile. But that doesn’t mean it’s time for investors to avoid stocks. While equity declines are becoming more likely, these dips could be an opportunity. “At this point we would want to buy the dips as they occur,” says Mueller-Glissmann … Right now, the [analyst’s] model indicates the risk of a stock market drawdown has increased slightly, as a result of slowing growth and slightly elevated stock valuations. That’s counterbalanced by positive equity price momentum, which has been supported by still reasonably solid macroeconomic conditions. “A strong positive trend in equities tells you the risk of an imminent bear market is low, because it will take time for macro conditions to deteriorate,” Mueller-Glissmann says. Even more importantly, inflation momentum has been declining for more than a year”
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Diversion: “How much does hard work matter?” – Marginal Revolution