The investment benefits of real assets and top related Canadian stock picks from Credit Suisse

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

The global research team at Credit Suisse published a long report on the benefits of global infrastructure investing, emphasizing the ownership of real assets and including related top picks in Canadian stocks,

“Brookfield Asset Management (BAM) is one of the largest global infrastructure market participants. In “Real Assets: The New Essential”, the company noted, in part: – ‘Importantly, we believe that Real Assets offer a relatively unique combination of yield, stability and growth that can provide downside protection as well as upside value creation …. Real Assets have demonstrated a proven ability to enhance overall risk-adjusted returns across market cycles.’”

The report provided a table summarizing the advantages of real assets,

“Steady cash flow streams supported by regulated or contractual revenues … reliable current income with long term capital appreciation potential … meaningful leverage to economic growth, visible growth drivers. Compelling absolute and relative returns, low volatility, inflation protection … portfolio diversification.”

The Canadian stock picks are ATCO Ltd., AltaGas Ltd., Brookfield Renewable Partners LP, Northland Power Inc., TransAlta Corp. and Tidewater Midstream and Infrastructure Ltd.

” CS: Potential benefits of investment in real assets” – (table) Twitter

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The North American research team at Citi warned investors to expect a slowdown in 2022 and provided sector guidance,

“As we look across our research platform, macro views tend to align with micro perspectives. 4% GDP growth for ‘22 includes a slowing closer to 2% by year end. Our oil price forecast is for a $66 WTI average, but with a $59 end of year projection. In turn, core CPI is expected to peak early in ‘22 and decelerate toward +2.7% later in the year. We project that 40%+ S&P 500 earnings for this year will decelerate toward +8% for next… Financials and Industrials OW’s [overweights] headed into ‘22 provide tactical exposure to gradual supply chain relief while incorporating rising interest rate optionality. Our Health Care OW takes us a step down the a post inflation peak path. A Consumer Discretionary OW reflects confidence in consumer spending and a historic performance bias in falling inflation periods. On the other hand, and UW in Info Tech reflects its solid 2H ‘21 performance and valuation risk to rising rates.”

“Citi warns investors of a slowdown in 2022″ – (research excerpt) Twitter

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CIBC technical analyst Sid Mokhtari highlights the stocks most likely to sell off due to tax loss selling, and might provide a lucrative entry point in some cases,

“Based on historical data analysis, our studies show that stocks that have declined by 20% or more from their 52-week highs with negative returns from the start of the year to October 31 are likely to show more downside pressure through to the first two weeks of December (often referred to as the tax-loss selling period)… The flipside of the tax-loss period is the January effect (December 15 through mid- or late-January), during which time bargain hunters (or the previous tax-loss sellers) may come back to the market for opportunities to pick up beaten down stocks that have better fundamental backing while trading near their 52-week lows … From the large-cap TSX-60 index, Barrick Gold (ABX) and Wheaton Precious (WPM) stand out in the gold sector, Saputo (SAP) in staples, and Canopy Growth (WEED) in the cannabis space … “

The full list of buy candidates is extremely long so I will just list some of the stocks with buy ratings by CIBC analysts. Highlights include Martinrea International Inc., Well Health Technologies Corp., Air Canada, Fortuna Silver Mines Inc., Eldorado Gold Corp., Yamana Gold Inc., Transcontinental Inc., Hudbay Minerals Inc., Boralex Inc., and Northland Power Inc.

“CIBC: How to benefit from tax loss selling” – (research excerpt) Twitter

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Newsletter: “A ‘game changer’ device from Apple is imminent” – Globe Investor

Diversion: “How are Rome’s monuments still standing?” – BBC

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