A daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
RBC Capital Markets recently held a global energy conference in New York featuring more than 100 corporate presentations, panels, and keynote speakers. The RBC research team published a recap report Tuesday morning,
” We recognized three themes across our three key note speakers:
1) No respite from the energy crisis. All three of our keynote speakers highlighted lack of investment in the energy space and refining capacity constraints as central to the current energy crisis 2) Pragmatism on balancing energy security and the energy transition. The message was that we should be able to accomplish investing in renewable energy and the transition while simultaneously ensuring that our current energy base is sufficient enough to meet global demand in the short and medium term. Eni CEO Claudio Descalzi highlighted that the two initiatives do not need to be in conflict with one another … 3) A precarious environment for policy and key decision makers. Given the lack of policy options, solutions that were viewed as extreme in the past are more frequently being mentioned in discussions pertaining to energy security. Descalzi had mentioned that price caps were in discussion among several European nations as being a potential avenue to providing consumer relief without further disrupting Russian energy imports … Our highest-conviction ideas across our global energy, power and infrastructure teams include Shell (SHEL LN), Canadian Natural Resources Limited (CNQ CN), ConocoPhillips (COP US), ARC Resources (ARX CN), Brigham Minerals (MNRL US), Secure Energy Services Inc. (SES CN), Pembina Pipeline Corporation (PPL CN), The AES Corporation (AES US), Algonquin Power & Utilities Corp. (AQN US), and Drax Group (DRX LN).”
“The three big takeaways from RBC’s recent global energy conference” – (research excerpt) Twitter
Morgan Stanley U.S. equity strategist Michael Wilson attempted to uncover recession-proof stocks,
“Forward EPS contractions over 2% are fairly rare. During non-recessionary times, the median EPS contraction is about 5%. During recessions, EPS contractions ramp up to 14%. Such a decline would take the consensus of $239 today down to $206; putting a 14/15x trough multiple on this implies a price range of 2,900 to 3,100. Given the macro turmoil of the past few weeks, we wanted to provide a screen of stocks where earnings are relatively insulated from this risk and have the potential to see upward revisions… We polled Morgan Stanley analysts to see where they had high conviction that earnings will be revised upward going into 2023.”
The list is surprisingly small at 20 members. As usual, I’ll skip the energy and financials which leaves Endeavour Group Holdings Inc., Liberty Formula One, Match Group, Coca-Cola, Monster Beverage Corp., Eli Lilly & Co., Advanced Drainage Systems Inc., Alaska Air Group Inc., Deere & Co., Delta Airlines inc., Driven Brands Holdings Inc., Willscot Corp., Zaoom Video Communications Inc., Sherwin-Williams Co., an AES Corp.
“MS’s Wilson looks for recession-proof stocks (and Formula One racing is among them)” – (table ) Twitter
Diversion: “Is Google Dying? Or Did the Web Grow Up?” – The Atlantic
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