Freehold replaces Hydro One as a top pick
Freehold replaces Hydro One as a top pick
iA Capital Markets analyst Matthew Weekes added Freehold Royalties to his firm's "2022 Top Picks" list for the second quarter, replacing Hydro One. David Leeder writes in the Eye On Equities column that Mr. Weekes is maintaining his recommendation for Freehold at "strong buy" and share target at $19. Analysts on average target the shares at $18.39., Mr. Weekes says in a note: "We believe Freehold offers compelling relative valuation to peers, with the lowest leverage in the sector and unique U.S. exposure, which provide an additional layer of diversification and business sustainability. Based on our commodity price sensitivity analysis, Freehold's debt will be fully repaid by midyear at current commodity prices, assuming no acquisitions. However, we believe that Freehold will continue to pursue acquisitions, focusing on U.S. acreage and taking a patient approach that seeks reasonable valuations while near-term organic production growth is generated from existing acreage. Finally, our sensitivity analysis indicates that Freehold's dividend, which is currently yielding more than 6 per cent, is sustainable at low oil prices."