Two sectors that look like they may have hit bottom.
Hello:
As we wind up what’s been a tough year for everyone, I thought You Should Know that two analysts we have a lot of time for have given us their views that we’ve seen the bottom of both the tech and mining sector markets.
We invited them both on our morning call on Wednesday and they offered thoughts to our entire team in Canada and Europe.
Here’s a quick overview of what they had to say:
Martin Toner is an equity research analyst for ATB Capital Markets in Toronto who publishes a report that covers what he calls the “Growth & Innovation” universe, which is composed of ten larger-cap tech stocks. Here are the key takeaways from his latest report and from his remarks to our group on Wednesday morning:
The large-cap tech sector, has erased all the COVID-19 gains. Multiples look attractive, and evidence of building momentum.
Many of the leading names in the sector - SHOP, LSPD, DCBO and others - are up from 20% to 60% from their lows, which were almost all hit as recently as October and November.
The market is now starting to see leadership from Shopify.
The biggest indicator to watch for the sector is signs of inflation easing, with lower commodity prices being a first sign
The small-cap and micro-cap tech sector is still stuck in a sideways pattern, with liquidity or access to capital being key roadblocks for many companies.
Martin is fundamentally bullish on the tech sector in Canada over the next cycle - hugely attractive NTM P/S multiples in the 6x range (down from 11-12 x at the peak) and high gross profit margins (50% - 80%)
John Newell is one of Canada’s leading technical chart analysts following the junior resource sector. He’s a technical advisor as well to the Cordillera Minerals Group. Here’s a chart that John used and some summary points below to back up his bullish thesis on this sector:
The gold market is showing signs of setting up at a bottom for a strong upswing similar to a similar pattern that took place in 2016
John feels that Canada will take a leading role in ALL mining sectors as we look at current low valuations on everything in the mining space from micro-cap all the way to large-cap companies.
The push to electric battery metals is especially of interest to him - you’ll see other charts that John does if you connect with him on LinkedIn.
His top name in the sector is Agnico Eagle AEM-T $70.82 Mkt Cap $31 billion.
If you’d like to connect with Martin or John directly, please let me know and we’d be happy to arrange that. Thanks for your on going interest and support, we appreciate it.