Scotia updates its top 30 Canadian stock pick list

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

Global equity markets are likely to be shoved around by U.S. election news for the next few days. The stability of Bank of America’s updated list of top stock picks for high quality balance sheets combined with above-market dividend yields is thus ideally timed,

” Screening Criteria: S&P Common Stock Rank of A+, A, or A-. The S&P Common Stock Rankings are our main measure of quality … Return on equity (ROE) greater than that of the S&P 500 ROE. Debt/Equity lower than that of the S&P 500. Trailing 12-month dividend yield greater than that of the S&P 500. BofA investment rating indicates “Buy” or “Neutral” as well as BofA income rating of “7”, indicating the potential cash dividends are considered likely to remain the same or higher. The ratio of the last 12-months’ free cash flow to dividends (FCF/Div) must be greater than 1.0.”

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The stocks on the list are C.H. Robinson, Quest Diagnostics, Emerson, General Dynamics, Garmin, Johnson & Johnson, Procter & Gamble, Pfizer, Public Storage, Robert Half, Republic Services, Snap-On and Texas Instruments.

“@SBarlow_ROB BoA: Top picks for U.S. high quality dividend yield” – (table) Twitter

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Scotiabank strategist Jean-Michel Gauthier sees value stocks as the winner if Joe Biden wins the election. He updated the firm’s top 30 Canadian stock picks,

“Value has been positively correlated with improving Biden odds, while Momentum stands opposite. Value would truly shine in a full Democrat sweep (House, Senate, Presidency). Momentum prefers a divided government, and Quality is the likely winner in a contested election or status quo.”

The top 30 stocks include new additions Tourmaline Oil Corp and Teranga Gold Corp.

Also on the list are Dundee Precious Metals Inc., Canfor Corp., West Fraser Timber Co Ltd., Ritchie Brothers Auctioneers, TFI International Inc., Stantec Inc., BRP Inc., Sleep Country Canada Holdings Inc., Metro Inc., Celestica Inc., Shopify Inc., Northland Power Inc., Real Matters Inc. and Northview apartment REIT.

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“@SBarlow_ROB BNS’ quant-driven list of top 30 Canadian stocks” – (table) Twitter

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Citi quant strategist Hong Li see markets positioned for a Joe Biden win and predicts ongoing equity market volatility (my emphasis),

“Value outperformed in October as the 10-year yield rose to a multi-month high even though the equity market sold off. Low Vol continues to underperform the most. The equity market appears to price in increased odds of a Biden win and blue wave, with implied higher long-term interest rates, stable credit spreads, a stronger US Dollar and lower oil prices. Growth and Low Beta rebounded last week amid heightened concerns over increased coronavirus cases. Growth remains the most crowded factor as its macro risk stays at a 20-year high and its short interest remains low. A prolonged uncertainty around the U.S. election and the second wave of coronavirus may provide support for Growth. Price Momentum continues to be highly correlated with Growth. We believe the rotation between Value vs. Growth and its correlates (Momentum and Revisions) will remain volatile”.

“@SBarlow_ROB Citi sees markets positioned for a Biden win” – (research excerpt) Twitter

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Newsletter: “Investors’ guide to U.S. election night” – Globe Investor

Diversion: “A Man With an Allergy to Cold Nearly Died After Stepping Out of a Hot Shower” – Gizmodo

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