Citi U.S. equity strategist Scott Chronert suggests that growth stock bargains can be found in the U.S. equity market. The Russell 1000 Growth index has experienced a modest decline from its recent highs, leading to potential buying opportunities. Chronert recommends adding stocks that have declined at least 10 percent from their recent highs but still have a stable fundamental outlook and reasonable medium-term free cash flow growth expectations. Within the Russell 1000 Growth index, two-thirds of the stocks have experienced a decline of 10 percent or more, with a third of the stocks down worse than 20 percent. Chronert’s screening approach incorporates market-implied free cash flow growth expectations to compare against longer-run consensus estimates. Some of the growth stock options to consider include Las Vegas Sands, Teradata, Datadog, TKO Group Holdings, Lockheed Martin, Bruker, Draftkings, Insulet, Pinterest, Chipotle Mexican Grill, Netflix, Hubspot, Lam Research, Rockwell Automation, MongoDB, Apple, KLA Corp., Paycom Software, Nvidia, and Intuitive Surgical.
Source: Citi U.S. equity strategist Scott Chronert
Rethinking Home Construction as a Solution to Canada’s Housing Affordability Crisis
BMO economists Doug Porter and Robert Kavcic challenge the notion that home construction alone can solve Canada’s housing affordability crisis. While they acknowledge the need for a steady supply of new homes given the country’s population growth, rising rents, and high home prices, Porter and Kavcic argue that increased supply alone is not enough to address affordability issues. They emphasize that excessive demand, including investment demand, has contributed significantly to the lack of affordability. Therefore, focusing solely on boosting supply may not be the most effective approach. Instead, they suggest that a comprehensive solution should consider addressing demand-side factors as well. While aspirations for increased homebuilding are commendable, unrealistic targets may not provide a sustainable solution to affordability strains. Without addressing demand, even a surge in supply will likely be insufficient to meet the needs of potential homebuyers.
Source: BMO economists Doug Porter and Robert Kavcic
Reassessing Net Interest Margins and Adjusting Price Targets
RBC bank analyst Darko Mihelic examines the net interest margins (NIMs), which reflect profits on basic lending, across different sectors. After analyzing NIMs, Mihelic adjusts price targets on all stocks. Among the large Canadian banks, TD has experienced the most significant NIM expansion, while BNS has seen NIM declines since interest rates started rising. Mihelic notes discrepancies between disclosed and implied NIMs for BNS and CM compared to other banks. As a result, Mihelic lowers NIM estimates for BNS, but still expects the bank to have the strongest NIM growth in 2024 due to its positioning for falling interest rates. However, the positive impact of lower rates for BNS is smaller than historical trends. Additionally, the report touches on expectations of improved capital markets earnings and provisions for credit losses. While core EPS growth is predicted to rebound in 2024, uncertainties in the macro environment and on the regulatory front limit confidence. Consequently, slight reductions to price targets are made for all the banks.
Source: RBC bank analyst Darko Mihelic
New Dinosaur Discovery Raises Questions about Existing Knowledge
A recent dinosaur discovery challenges existing knowledge about these prehistoric creatures. This finding brings into question “everything we think we know” about dinosaurs. The implications of this discovery are discussed in an article in The Atlantic, which dives into the details and offers insights into the exciting and evolving field of paleontology.
Source: The Atlantic
Sources:
– Citi U.S. equity strategist Scott Chronert
– BMO economists Doug Porter and Robert Kavcic
– RBC bank analyst Darko Mihelic
– The Atlantic (article title: “A New Dinosaur Discovery Challenges ‘Everything We Think We Know’”)