Capital gains tax hike creating changes in tax harvesting, buying opportunities in these stocks, says Scotia strategists

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

“The June 25 deadline for the implementation of the new capital gains tax in Canada is approaching quickly. As a reminder, capital gains in excess of C$250,000 will use an inclusion rate of 67% instead of 50% when applying the marginal tax rate. High-net-worth Canadians could thus potentially generate tax savings by engaging in an early tax loss harvesting strategy ahead of the deadline ... However, Canadian YTD stock winners have generated unusual losses in June.

The team listed Veren Inc., Nexgen Energy Ltd., Cenovus Energy Inc., Tourmaline Oil, Advantage Oil and Gas Ltd., Peyto Exploration and Development Corp., Methanex Corp., Magna International, Ivanhoe Mines Ltd., Teck Resources Ltd., Linamar Corp., Brookfield Corp., Intact Financial Corp. and Converge Technologies Solutions as potential bounceback candidates.

“The yearly rise of 1.27 million was the most on record, while the percentage gain of 3.2% is the largest since 1958 and more than double the historical mean. Net international migration of 1.24 million drove almost all the rise, with two-thirds propelled by temporary immigration. If, as planned, the federal government slashes the number of temporary immigrants from 6.8% of the population to 5% within three years, then overall growth will slow to around 1%.

RBC head of global equity strategy research Lori Calvasina sees signs that U.S. markets are ahead of themselves, “We’ve added a new stress test to our valuation analysis. This is an optimistic scenario which bakes in lower inflation, lower 10-year yields, and more Fed cuts than the current consensus . To be clear, this is not our base case for year-end 2024. But it is a helpful exercise in terms of understanding what the stock market may be pricing in currently. These assumptions imply that a reasonable trailing P/E for the S&P 500 at year-end would be around 22.

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These bank stocks are most likely to hit profit targets, says Scotia analystDaily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
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