BRP in, Empire out in Scotia strategist’s quantitatively driven top 30 TSX stocks list

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

Formerly bullish strategist Jonathan Golub from Credit Suisse reiterated an S&P 500 target only 2.5 per cent ahead of current levels because of the worst earnings season since the financial crisis,

“4Q EPS grew -2.4%, on +5.9% revenues, +1.9% buybacks, and a -10.2% contraction in margins. EPS topped estimates by just 1.2%, versus a long-term average of 4.8%. Ex-TECH+, EPS grew a more robust +5.7%. EPS growth for EAFE expanded +8.5%.We are lowering our 2023-24 EPS forecasts from $215 and $230 to $210 and $215 on margin pressures. This compares to $220 for 2022.

“The quant junk rally petered out in February, giving the edge to Quality. Still, deteriorating prospects for Energy hurt those styles. Momentum has been lagging since October due to several reversals. Slower Pace of Macro Deterioration Makes Fundamentals Relevant Again as “Growth” Advantage Shifting Away from Resources Towards Cyclicals Ex-Tech. Lower volatility in macro data leads our SQoRE model to put less emphasis on high frequency/high volatility Momentum metrics.

BRP Inc. replaced Empire Co. Ltd. this month. The other stocks on the list are Enerplus, Advantage Energy, Tourmaline Oil, MEG Energy, Birchcliff Energy, Crescent Point Energy, Whitecap Resources, Stelco Holdings, Teck Resources, Torex Gold Resources, IAMGOLD, Stella-Jones, Winpak, Mullen Group, TFI, Russell Metals, Exchange, Finning, Boyd Group Services, Uni-Select, Dollarama, Alimentation Couche-Tard, Loblaw Co.

 

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