A TD analyst is bullish on REITs and reveals his top picks

Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
TD Cowen analyst Sam Damiani is bullish on REITs and provided top picks,
“Q3/24 results were in-line overall, as Canada’s reduced immigration targets, rising bond yields, and the U.S. election continued to weigh on sector sentiment. Overall fundamentals remain healthy, which gives us confidence in underlying valuations. We view current valuations as attractive on an absolute basis, but in particular relative to U.S. REITs … U.S. REIT FFO [funds from operations] yields (excluding Towers and Data Centers) are now in line with their 5.9% five-year average, while Canadian REITs at 8.7% are above their 8.2% five-year average … Our property sector pecking order is Retail, Seniors Housing, Industrial, Apartments, and Office. We believe the majority of the relative valuation move between Retail and Residential is done. Although our preferences between sectors is much closer, we do not see a compelling reason for Residential to regain leadership in the near term until implications from the immigration change are more fully understood … Our overall top larger-cap picks areREI.un, CSH.un, GRT.un, BEI.un, and FCR.un”
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Scotiabank analyst Maher Yaghi thinks investors are too optimistic about telecom stocks,
“Current consensus estimates imply a view that wireless pressure should peak late this year with the rate of decline improving in 2025 with wireless ARPU only declining by 0 to 1% y/y in 2025 on average for incumbents. In a market where the CRTC continues to scrutinize wireless pricing and Freedom Mobile calling out incumbents in public such as their petition last week, we see little probability of a quick improvement in pricing. Our consolidated EBITDA forecasts imply 1 to 3% lower growth for 2025E vs consensus. This lower growth expectation is due to lower wireless ARPU and loading forecasts. We have lowered some of our valuation multiples and short/medium term DCF growth assumptions leading to lower target prices. We continue to believe that a more grounded street expectation on pricing is needed to put a long term bottom on stock valuations”
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Foreign exchange analysts at BofA Securities do not see further weakness for the loonie next year,
“We do not expect USD/CAD to sustainably stay above 1.40 [US$0.7143] in 2025 Post-US election USD rally drove USD/CAD above 1.40 for the first time since March 2020. We believe the macro backdrop has become less constructive for CAD in 2025, but still not to the extent that would keep USD/CAD sustainably above 1.40 next year … In the near-term, we expect more resilience for the USD. Recent inflation data appears to be firmer in the US than in Canada. Renewed global trade uncertainty and imminent tariff risks would likely also keep the USD supported. However, we expect USDCAD to fall below 1.40 once the bullish USD momentum wanes. The USD is overvalued, and short CAD positioning is stretched. Bearish USD/CAD catalysts could lead to more outsized moves than bullish catalysts. We believe market is also underestimating the pace of growth recovery in Canada. Unemployment rate uptrend has likely already peaked since August 2024 (see report: FX Watch: 07 October 2024), and we expect the economy to accelerate significantly from Q4 2024 onward … We now expect USD/CAD to fall to 1.37 [ US$0.7299] by end of 2025 and to 1.35 [US$0.7407] by end of 2026”
This was written before the tariff news overnight but at time of writing the loonie is recovering ground and is down about half a cent.
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Diversion: “Bird Flu Emerges as Key Reason Behind U.S. Egg Shortage” – Gizmodo