The current economic cycle risks ending abruptly, warns a Quebec strategist.
The credit cycle is entering a contraction phase, according to Sébastien McMahon of iA Global Asset Management.
“The logical consequence of the banking turmoil in the United States is that banks are less willing and able to lend,” he said in a study released Thursday.
The cumulative impact of the massive tightening of monetary policies around the world since March 2022 is still to come, he said. “Ultimately, this remains an uncertain investment environment that is not favorable for equities over fixed income securities. »
He believes that with the money market now yielding 5.25%, it is increasingly difficult to argue for an overweight in equities.
According to its base scenario, the bear market in equities will continue to a capitulation event, with a likely bottom this year.
Gildan gained a new fan this week in Martin Landry. This analyst at Stifel / GMP launched the official monitoring of the activities of the Montreal manufacturer of t-shirts and socks at the beginning of the week by suggesting to buy the title. To support his recommendation, he points to Gildan’s healthy balance sheet, the potential for earnings per share growth over the next four years and the current valuation which does not adequately reflect recent improvements in profitability. Of a dozen analysts interested in the stock, only one does not offer the purchase.
A major shareholder of Supremex has just purchased nearly $300,000 of shares in the Montreal manufacturer of envelopes and packaging products. George Christopoulos bought a total of 50,000 shares during the April 28 and May 1-2 sessions. George Christopoulos is Supremex’s second-largest shareholder with a stake of more than 10%. Supremex will release its year-end financial performance on Tuesday.
Air Canada management took investors by surprise on Thursday evening by improving its forecast for 2023. This news, combined with the decline in the stock since February, has prompted Citi analyst Stephen Trent to change his mind. He now recommends buying the stock, pointing out that the adjusted operating profit target for 2023 is now considerably higher (nearly 40%) than the previous forecast. The Montreal air carrier will gather its shareholders at its annual meeting on Friday and will present to them the performance at the start of the year. Twelve of the 15 analysts who track Air Canada suggest buying the stock.
Although Air Canada’s new forecast is significantly higher than forecast, RBC analyst Walter Spracklin prefers to remain cautious about demand for travel beyond the coming summer. He wonders in particular about the new competition, the rebound in business travel and the ability to maintain prices. His colleague Kevin Chiang of CIBC admits that investors are indeed on the lookout for any signs of deteriorating demand. However, he said he continues to believe that Canadian airlines can continue to benefit from a recovery that he describes as countercyclical and expects Canadian air traffic to remain resilient.
The Canadian National won the support of CIBC on Thursday, the day after its annual day of presentations for investors. The remarks made lead analyst Kevin Chiang to now suggest the purchase of the title of the Montreal rail carrier. Highlights include operating plan to improve network fluidity and asset utilization, and higher-than-expected earnings-per-share targets (although CN will need to incur additional spending to achieve them) .
A major credit rating firm upgraded Bombardier’s rating earlier this week. Standard
A few days earlier, analyst Cameron Doerksen, of National Bank Financial, had changed his opinion on the title of Bombardier after learning about the performance at the start of the year. He has been offering since the purchase of the action of the Montreal business jet manufacturer.
He had withdrawn his purchase proposal in February after an impressive surge in the stock market. The stock is again attractive, in his eyes, given its recent decline, the results above its expectations which have just been revealed and the recent upward revision of financial targets for 2025.
The Quebec securities of Quincaillerie Richelieu, Molson Coors and CGI reached this week a new high of the last 52 weeks on the Toronto Stock Exchange. On the other hand, those of Fiera Capital, Lightspeed, Opsens and Innergex hit a 52-week low this week.