Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
RBC analyst Pammi Bir outlined their top picks in the REIT sector ahead of earnings reports,
“Our Q2/23E reflect average year-over-year FFOPU [funds from operations per unit] growth of 1%, consistent with Q1/23. However, the average masks wide dispersion, with leadership from industrial (+7% YoY FFOPU), multi-family (+5%), and retail (+3%), well ahead of diversifieds (-4%) and office (-11%). We expect the pace to build through 2023E with sector average FFOPU growth of 2%, down from last year’s 3%, partly from the impact of higher interest rates... "
Mr. Bir has “outperform” ratings on Boardwalk REIT, BSR REIT, CAPREIT, European Residential REIT, Interrent REIT, Killam Apartment REIT, Minto Apartment REIT, Morguard Residential REIT, Chartwell Retirement Residences, Allied Properties REIT, Dream Industrial REIT, Granite REIT, First Capital REIT, RioCan REIT, Smartcentres REIT, and Storagevault Canada Inc.
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The housing shortage and related affordability issues are decidedly not being addressed by new construction,
“Strapped by worker shortages, higher borrowing costs, and building restrictions, Canadian homebuilders don’t appear to be on a path to double housing construction over the next decade to ease affordability strains. In fact, quite the opposite. In constant dollars, investment in residential construction fell for the eighth time in ten months in May, down 15% in the past year to levels prevailing in the early days of the pandemic and to below the norm of the past decade. Surprisingly, spending even sagged in Alberta, despite robust demand from migrant inflows and decent affordability. Real spending in that province is down 28% in the past year to the lowest on record (back to 2010).”
“BMO: The housing shortage and related affordability issues are decidedly not being addressed by new construction” – (research excerpt) Twitter
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BofA Securities analyst Dimple Gosai detailed the rousing success of the U.S. Inflation Reduction Act during its first year,
“As the one-year anniversary of the Inflation Reduction Act (IRA) approaches, its impact is becoming more evident. Over 270 new clean energy projects have been announced, with investments totaling $130-billion. Of this investment, half was earmarked for new renewable energy projects, representing 25 GW of capacity - enough to power over 22 million homes. Alongside the IIJA and CHIPS Act, the IRA has contributed to a doubling of real manufacturing construction spending since late 2021, boosting US GDP growth by 500 bps since Q2 of the previous year and driving manufacturing employment to its highest level since 2008. The clean energy sector now accounts for more than 40% of all energy jobs in the US, with a positive shift towards greater gender diversity as women represent over half of the energy jobs added in 2022.”
Cameco Corp and Nutrien Ltd. were listed among the 40 North American companies expected to benefit from the ongoing stimulus. Other potential investments most likely of interest to Canadian investors include Ford Motor Co., Eli Lilly & Co., Caterpillar Inc., General Electric Co., Honeywell International Inc., CF Industries Holdings, Linde PLC and Sunrun Inc.
“From BofA: 40 stocks benefiting from success of IRA” – (table) Twitter
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Diversion: What’s the best age gap in a relationship? – The Economist
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