Credit Suisse updates its top Canadian stock picks

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

The research team at Credit Suisse has updated their list of top Canadian stock picks,

“Every Canadian research analyst identifies and ranks up to 3 Outperform rated stocks based on a 6-12 month time horizon. For the #1 Top Pick, we expand our analyst’s view by including Investment Thesis, Catalysts, Debates, Pushback, and Valuation. The exercise resulted in a list of 11 top stock ideas”

The No. 1 picks are Intact Financial Corp., TransAlta Corp., Suncor Energy Inc., and Agnico Eagle Mines Ltd. The No. 2 selections are Royal Bank of Canada, AltaGas Ltd and Newmont Mining Corp.. The No. 3 include Sun Life Financial Inc., Northland Power Inc., and Endeavor Mining Corp.

Teck Resources Ltd. is also a top pick, but by a U.S. analyst.

Investors should be aware that Credit Suisse does not cover all domestic market sectors, so the universe is somewhat limited.

“@SBarlow_ROB Top Canadian stock picks from Credit Suisse” – (table) Twitter

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BMO chief economist Doug Porter notes that negative effects of drought conditions on the prairies appear to have skipped over one specific crop – cannabis,

“One highly underrated drag on Canada’s recovery this year is the intense drought in the Prairies. StatCan estimates that the value of traditional crop production was down 43.7% from year-ago levels in August. This sector alone, which normally accounts for just a little more than 1% of GDP, thus carved overall growth by a whopping 0.6 percentage points in the past 12 months. (That is, real GDP was up 4.4% y/y in August, but up 5.0% y/y excluding traditional crop production.). The volume of the [cannabis production] has actually risen 16.9% y/y. And, as the chart reveals, cannabis production (both licensed and estimated “unlicensed” ) is now almost as big a part of Canadian GDP as all other crops combined. Cheech & Chong would be proud. “

“@SBarlow_ROB BMO: Cannabis ‘now almost as big a part of Canadian GDP as all other crops combined’ ” – (research excerpt) Twitter

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Rockwell Automation Inc., along with Japan’s Fanuc Ltd., is the stock I use to track “robots are taking are jobs” fears.

Morgan Stanley analyst Josh Pokrzywinski highlighted Rockwell’s strong outlook as capital spending recovers. Rising wage costs will only provide a stronger tailwind,

“MS Research Analyst Josh Pokrzywinski continues to rank ROK (OW) among his top thematic picks and believes FY22 guidance is emblematic of the magnitude of automation and near-shoring set to occur. He also raises his PT [price target] to $387. While guidance was well ahead of consensus and his own higher estimate, he believes revenue could still surprise to the upside off this higher base as FY22 revenue and FY21 orders are each around $8.2B. If anything, he thinks that his ROK thesis over the past 3 quarters could be called oversimplified as he saw $2B of run-rate orders as the path to $8B in revenue when consensus viewed $7.5B as more likely…. He believes that the recent rerating is justified given the revenue growth trajectory and room for upward estimate revisions.”

“@SBarlow_ROB Our future robot overlords update from MS” – (research summary) Twitter

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Newsletter: “Investors need not worry about hyperinflation” – Globe Investor

Diversion: “Newly Approved Weight-Loss Drug Is Selling So Fast That Many People Can’t Get It” – Gizmodo

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