Scotiabank Scotiabank strategist Hugo Ste-Marie is recommending clients add to yield-heavy utilities and pipeline stocks,
“Defensive sectors have been out of favor for some time now. Until we see macroeconomic conditions deteriorate further (yields drop), appetite for Defensives stocks could remain muted. Still, that’s probably what makes it a good time to buy from a contrarian perspective … trying to find the right balance between defense and offense is key until we have more clarity on the macro scenario. We’re slightly adding to Utilities/pipes (OW) [overweight] and Energy (up to OW). The move comes at the expense of Banks (UW) and Gold (UW). Overall, the portfolio is OW Cash, Staples, Utilities/pipes on the Defensive side, with OW positions in Energy, Industrials, and Discretionary on the resource/cyclical side.
“Lineup. We’re adding to TRP and ALA in Utilities/pipes sector as well as CVE in Energy. We trim the banks (all four) and gold (swapping ABX for K). Within Discretionary, we’re switching CTC/a for LNR, where our colleague Jonathan Goldman recently initiated on the name with a SO [sector outperform] rating”