Scotiabank’s top 30 Canadian stock picks for June

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

BofA Securities U.S. quantitative analyst Savita Subramanian updated her list of top picks for high quality stocks with high dividend yields,

“The High Quality & Dividend Yield Screen outperformed the S&P 500 index in May by 2.0ppt (+2.7% on a total return basis vs. +0.7% for the S&P 500 index). Year-to-date, the screen has led the index by 5.5ppt (+18.1 % vs. +12.6 %, respectively). Since inception (Feb. 2004), the screen has outperformed the S&P 500 index by 1.8ppt per year.’

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For June, ViacomCBS Inc. has been added while Packaging Corp. was removed. The resulting list of 12 stocks consists only of companies with S&P credit ratings of A- or higher. These are C.H. Robinson Worldwide Inc., Cintas Corp., Quest Diagnostics Inc., Emerson Electric Co., General Dynamics Corp., Garmin Ltd., Johnson & Johnson, Public Storage, Robert Half International Inc., Snap-On Inc., ViacomCBS Inc. and Texas Instruments Inc.

” @SBarlow_ROB BoA: Top picks for high quality U.S. dividend yield” – (table) Twitter

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BMO chief economist Doug Porter detailed the distorting effects of residential real estate on the Canadian economy,

“The flip-side of housing’s strength is the ongoing deep dive in business investment. Toting up the three big categories of non-residential private capital spending shows it fell to just 9.3% of nominal GDP in Q1. That’s also a record, but a record low, and compares with a long-run average of just over 12% of GDP. This is the first time on record that more resources were devoted to residential construction than business investment. Both metrics are likely at extremes and will reverse as things re-open. But the fact they are even close is astonishing. (The U.S. Q1 figures were 4.8% for residential and 13.4% for nonres—a different league!)”

“@SBarlow_ROB BMO: “first time on record that more resources were devoted to residential construction than business investment” – (research excerpt) Twitter

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Scotiabank strategist have updated their list of top 30 Canadian stock picks. The firm’s SQoRE stock selection model consists of 16 factors covering value, growth, momentum and quality.

In the June update, strategist Jean-Michel Gauthier writes,

“Defensives continue their ranking recovery as Real Estate, Utilities, and Telecoms enjoy a Momentum rebound. Meanwhile, Cyclicals are hamstrung by Tech falling to its lowest rankings since the bursting of the tech bubble. Weak Industials/Discretionary trends are not helping, although Financials hit a new all time ranking high. Our pro-Resource ranking bias disappears on falling Base Metal miners. Still, Lumber and Energy are holding at their highs while Gold miners are waging a comeback”

Russell Metals Inc. and Centerra Gold Ltd. have been added, replacing First Quantum Minerals Ltd. and Sleep Country Canada Holdings Inc. The other 28 picks include Tourmaline Oil Corp., Crescent Point Energy Corp., Enerplus Corp., Teck Resources Ltd., Lundin Mining Corp., Labrador Iron Ore Royalty Corp., Transcontinental Inc., Magna International Inc., Canadian Imperial Bank of Commerce, Manulife Financial Corp., and Celestica Inc.

” @SBarlow_ROB BNS top 30 quant picks for Canadian stocks” – (full table) Twitter

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