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UnlockRatingREIT Investment Outlook
REITs have been a struggling sector in the market over the last few years as high rates have pressured margins and growth capabilities. As we enter a rate cutting environment in Canada, the future outlook for REITs is much more positive than in years past. XRE and ZRE are two viable options for interested investors. ZRE has the performance edge in recent years, while both funds are highly similar outside of that. The decision for investors should come down to if one wants equally weighted exposure or market-cap weighted exposure. Given how weak recent performance has been, we think that XRE may benefit in future years. As rates come down, larger players who have more leverage and will benefit, while raising capital to fund growth initiatives will also be cheaper. This will likely have a greater benefit on the cap weighted portfolio of XRE. We think either option is solid for Canadian investors looking for exposure to REITs, but we would give slight edge to XRE today.
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UnlockRatingIs up 54% this year. Revenues are up 15% YOY, and their Q3 beat earnings while management and services businesses saw a rise in inflows. They still have more room to run.
UnlockRatingIn the morning, he looks at the Wall Street futures. Are people in a good or bad mood? The TSX and S&P are at highs now; the U.S. has been cutting rates so close to the election, which is odd. Inflation is probably here to stay, given sharp raises for longshoremen and pilots. He fears if Canada cuts rates faster than the US, the CAD can fall below 70 cents. Oil prices will spike if the Middle East situation continues to deterioriate. Will Iran's supply be cut off?
Bank earnings lift markets to highs
In the U.S. Friday, bank earnings began and the positive surprises helped lift markets on Wall and Bay streets to new highs. For instance, Wells Fargo jumped 5.96%, pushing the S&P 0.68% higher as the Nasdaq climbed 0.44% and the Dow over 1%. For the week, the three indices advanced around 1.5%. Besides bank earnings, Tesla also dominated headlines as the company unveiled its robotaxi, but lacked many details, including a definite timeline. Since 2019, Elon Musk has been promising robotaxis, and unimpressed shareholders dumped Tesla shares by 8.64%. However, rival Uber benefited and saw its shares soar 11.17%. Elsewhere, Fastenal jumped 9.79%, and Domino’s Pizza added 5.32%. The U.S. 10-year yield slipped to 4.088% while Bitcoin rallied 5.4% to nearly US$63,000.
Not to be outdone, the TSX rose another 0.75% to close at 24,475, yet another high. For the week, the Canadian index rose 1.3%. The only sector losing ground was healthcare. Tech, discretionary and industrials led the gainers. Key names: CIBC up 2.37%, Brookfield Business Partners 3.95%, TFI International 3.65% and First Quantum Minerals +3.39%. However, bucking the bank rally was TD which sank another 4.01% after Washington slapped it with a US$3 trillion fine for allowing money laundering in TD’s U.S. operations. Gold added US$26 to US$2,655 and WTI declined 0.33% to US$75.60.
🏛 Wells Fargo (WFC-N) +5.96%
🚗 Tesla Inc (TSLA-Q) -8.64%
🚕 Uber (UBER-N) +11.17%
🚚 Fastenal Company (FAST-Q) +9.79%
🍕 Domino’s Pizza, Inc. (DPZ-N) +5.32%
🅱 Bitcoin (BTCUSD) (CRYPTO:BTC) +5.4%
🏛 Canadian Imperial Bank of Commerce (CM-T) +2.37%
🏛 Brookfield Business Partners LP (BBU.UN-T) +3.95%
🚚 TFI International Inc (TFII-T) +3.65%
⛏ First Quantum Minerals (FM-T) +3.39%
🏛 Toronto Dominion (TD-T) -4.01%
This Week’s Stock Picks & BNN Top Picks Summary: VAL-N, WW-Q and 23 Stock and 1 ETF Top Picks (Oct 04-10)
This week were 23 Stock and 1 ETf Top Picks in a wide range of industries: Industrials, Energy, Financials, Consumer, Healthcare, Technology and ETF. Here are this week’s Top Picks as selected by: Billy Kawasaki, Michael O’Reilly, Michael Sprung, Darren… read more
