iA Capital's 2022 Picks Equity analysts at iA Capital Markets unveiled their “2022 Top Picks” in a research report released Monday.
The list of 14 preferred equity selections is smaller than last year’s 17, due to a recent change to the company’s real estate coverage team.
The 2021 list delivered a total return of 9 per cent, outperforming the 5.2-per-cent jump in the TSX Composite Index. That result was down from a 15.7-per-cent gain in the first half of the year in an “extremely dynamic environment” that prompted analysts to adjust five of their 17 picks midway through the year.
The firm’s selections for 2022 are:
Mullen Group Ltd. (MTL-T) with a “strong buy” rating and $16 target. Average: $15.
Analyst Matthew Weekes: “We believe that Mullen’s stock offers very solid risk-adjusted upside, particularly as we believe the relatively low-risk nature of the Company’s underlying asset base, being over 50% real estate by net book value, is not given proper credit by the market. Given the uncertainty around the Omicron variant and headwinds in certain areas of Mullen’s business, we believe that a tempering of expectations was warranted following the Q3 results and 2022 guidance update. Going forward, with Mullen’s exposure to the robust e-commerce consumer market, we believe that its operations have resilience to the downside in the event of tighter pandemic restrictions, as well as exposure to the upside if economic recovery, energy, and industrial markets are strong in the year ahead. Additionally, we believe that Mullen’s margins will improve as it integrates its acquisitions completed in 2021, which in aggregate, were some of the most significant transactions Mullen has ever done. Finally, investors that enter the stock now will receive a dividend that is currently yielding over 5 per cent, and we believe is sustainable based on our payout projections”