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Financial services dominate a short list of Credit Suisse’s best Canadian investment ideas.
“Each Canadian research analyst identifies and ranks up to 3 Outperforming listed stocks based on a 6-12 month time horizon,” Credit Suisse said. Andrew St. Pierre wrote in a note. “For the top pick, we broaden our analyst’s perspective to include investment thesis, catalysts, debates, hindsight and valuation.”
The best outperformance picks are Brookfield Asset Management (NYSE: BAM) (BAM.A:CA), Agnico Eagle Mines (NYSE: AEM) (TSX:AEM:CA) and Canadian Imperial Bank (TSX:CM:CA) and the idea of underperformance is the Laurentian Bank of Canada (TSX:LB:CA).
“BAM’s core franchise and overall platform continue to be positively positioned longer term and benefit from accelerating fundraising, deal rollouts and monetizations,” analyst Andrew Kuske wrote. . “Continued progress on these efforts, growth in insurance business as well as accelerated real estate reconditioning could drive our existing guidance and valuation higher.”
Kuske’s second top pick was Innergex Renewable Energy (INE:CA) and third was TransAlta (TA:CA).
“Agnico Eagle is our top gold pick,” wrote analyst Fahad Tariq. “The new Agnico, following the merger with Kirkland Lake earlier this year, is one of the top 3 gold producers in the world with the lowest production costs among the major gold producers and a superior ESG performance We believe Agnico Eagle’s growing production profile and high-quality asset base (primarily in Canada) allows for the potential for revaluation, as well as the realization of synergies and the potential for increased return on capital. »
Endeavor Mining (EDV:CA) is the second top pick and Barrick Gold (GOLD) (ABX:CA) rounds out the top three.
“We believe CM is well positioned to deliver strong performance from many of its growth engines, including its domestic P&C segment and the US business, in terms of loan growth and margin expansion (despite expectations more subdued from the latter),” analyst Joo Ho Kim wrote. “The bank’s provision levels and capital ratio also remain strong, and we believe its overweight to domestic mortgages could be supportive from a credit perspective in the event of a downturn. CM continues to trade with strong relative discount to the group, and we see even more upside for expansion.”
He picked Bank of Montreal (BMO) (BMO:CA) second and National Bank of Canada (NA:CA) third.
“LB is undergoing a significant strategic transformation that we believe will take several years to execute and deliver,” Kim added. “Revenue growth lagged the peer group, reflecting a slowdown in its retail banking unit. continued focus on spending, we believe consistent achievement of targets is key. Although the shares are trading below book value, we are looking for signs of improvement.”
Look for the highest rated Canadian stocks.
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