Canaccord Top Picks for 2021 Last week, the Canadian equity research team at Canaccord Genuity released its outlook for 2021 along with stock recommendations from its analysts.
Portfolio strategist and quantitative analyst Martin Roberge laid out a positive outlook for the year ahead, expecting mass COVID-19 vaccinations to lead to acceleration in economic activity by mid-2021.
In the research note, he called for “mid/late-cyclical sectors leading the market, early cyclicals performing in line and defensives lagging.” He added, “This is very much in line with our strategy whereby we neutralize the growth-vs-value tilt and focus instead on arbitraging value cyclicals (energy, materials, industrials and financials) over value defensives (consumer staples, REIT’s, utilities and telcos).”
In terms of selecting stocks, growth versus value, he argued, “There should be room for both growth and value sectors in investor portfolios in 2021.”
In the energy space, three stocks are recommended.
Analyst Anthony Petrucci expects ARC Resources Ltd. to rally roughly 50 per cent to $9, while providing shareholders with an attractive yield of 4 per cent.
The analyst highlighted the stock’s attractive valuation (trading at a discount relative to its peers) and strong balance sheet, “ARC is on track to deliver organic production per share growth in 2020 of approximately 13 per cent, which ranks among the highest in the space. While 2021 growth is expected to be more muted, with the elevated production level we forecast ARC will generate roughly $775-million in cash flow in 2021, versus a capital spend of approximately $400-million. After dividend commitments of approximately $85-million, this suggests ARC will still generate nearly $300-million in FCF [free cash flow] in 2021.”