Friday, January 7, 2022 - BEFORE THE OPEN - Leishman Catling & Associates
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Friday, January 7, 2022
STOCKS
Source: FactSet (5pm EDT)
BEFORE THE OPEN
Source: Thomson Reuters
Canada’s main stock index futures were little changed ahead of a key U.S. jobs
report and the country’s employment data. U.S. stock futures rose modestly,
while European shares traded in holding pattern. Asian shares were mostly
higher, snapping two days of losses. Oil prices advanced as unrest in Kazakhstan
and outages in Libya fueled concerns over supply. Gold prices edged up on the
back of a weak U.S. dollar. Bitcoin slumped to its lowest since late September,
tumbling amid a broader sell-off for cryptocurrencies. COMMODITIES & CURRENCIES
Source: FactSet (5pm EDT)
STOCKS IN THE NEWS
Source: Thomson Reuters
BuzzFeed Inc. (BZFD):
The company on Thursday named Christian Baesler as chief operating officer,
filling a role that has remained vacant for over seven years just a month after the
digital media company's disappointing debut on the Nasdaq. The company
hasn't had a COO since Jon Steinberg stepped down from his role in 2014. Baesler
joined BuzzFeed last month after it acquired Complex Networks, where he will
continue to be the chief executive officer. He has overseen the operations of
Complex and its portfolio of brands since 2018.
Cameco Corp. (CCO):
The company said on Thursday it could resume production of roughly 24 million GLOBAL INDICES
Source: FactSet (5pm EDT)
pounds of uranium annually in North America if needed by the global market
given the political turmoil in Kazakhstan. The company said in an emailed
statement it was not clear how quickly it could resume the output, but that its
five mothballed mines in Canada and the United States are in good condition.
Moderna Inc. (MRNA):
The efficacy of boosters against COVID-19 is likely to decline over the next few
months and people may need another shot in the fall of 2022, Moderna Chief
Executive Officer Stephane Bancel said at a Goldman Sachs-organized healthcare TSX SECTORS
Source: FactSet (5pm EDT)
conference. Bancel said the company is working on a vaccine candidate tailored
to the Omicron variant of the coronavirus, but it is unlikely to be available in the
next two months.
THINGS TO KNOW
Source: Bloomberg Finance L.P.
This morning’s jobs data for December is expected to show the U.S. economy
added 447,000 positions in the month, with the unemployment rate ticking
lower to 4.1%. Investors concerned about price rises around the world got more
news to back their positions when euro-area inflation surprised by quickening to
an annual 5% in December, defying expectations for a slowdown. Bitcoin
dropped again overnight, declining to as low as $41,008 to hit the lowest level
since September.
NOT FOR DISTRIBUTION TO THE UNITED STATES. This publication is a general market commentary and is provided for informational purposes only. The author(s) is not a Research Analyst and this
communication is not the product of Canaccord Genuity Corp.’s Research Department. It should not be construed as a research report or investment advice.
For important information, please see the Important Disclosures beginning on page 9 of this document.CANADIAN EQUITIES OF INTEREST
Listed Alphabetically by Symbol
IGM Financial Inc.* (IGM: $46.80), Net Change: $0.95, Change: 2.07%
IGM doubles stake in ChinaAMC through Mackenzie
• Last night, IGM (through Mackenzie) announced that it is set to acquire Power Corp’s 13.9% stake in China Asset Management
(ChinaAMC) for $1.15B in cash that would effectively double its ChinaAMC stake to 27.8%
• Recall, Mackenzie also owns 13.9% of ChinaAMC so the transaction will effectively double their ownership stake to 27.8%.
• ChinaAMC’s pro forma ownership would also include 62.2% from CITIC Securities (i.e., one of the largest securities dealers in
China) and 10.0% from Tianjing Haipeng Technological Advisory Co. (private equity firm)
• Founded in 1998, ChinaAMC had C$309B of AUM (at Q2/21) through mainly an institutional and retail client base that ranks
#2 in long-term mutual fund AUM in China (>4% market share)
Stingray Group* (RAY.A: $7.04), Net Change: $0.18, Change: 2.62%
Cash flow rich
• Stingray announced the acquisition of InStore Audio Network (ISAN) for C$59M, composed of both upfront cash and an
undisclosed earnout mechanism
• ISAN is the largest in-store audio advertising provider in the US, reaching over 100 million shoppers across 16k retail locations
• ISAN is a significant player in the OOH space, owning exclusive long-term agreements with the likes of Rite-Aid, CVS, and
Albertsons
• The company offers clients a targeted in-store programmatic advertising medium that reaches customers via curated
streaming music services
US EQUITIES OF INTEREST
Listed Alphabetically by Symbol
Privia Health Group* (PRVA: $26.02), Net Change: $1.02, Change: 4.08%
Full-risk agreements with HealthFirst and Humana
• Since Privia's IPO, management has stated that it would enter full capitation arrangements at some point when the time was
right and when the company was confident its physician groups could do so in a profitable manner
• Privia's ACO in Florida and the Mid-Atlantic will transition approximately 23,000 lives to full capitation arrangements
• By taking full risk beginning January 1, the company anticipates recognizing $230 million in practice collections and GAAP
revenue
• In Florida, Privia will be taking full risk with an arrangement with HealthFirst, while in the Mid-Atlantic region the arrangement
is with Humana
RADA Electronic Industries* (RADA: $9.32), Net Change: -$0.05, Change: -0.53%
Continuing Resolution pushes some revenues into 2022
• Yesterday morning, RADA Electronic Industries (RADA) pre-released its 2021 revenue results of $117M
• Management attributed the guidance slippage to the ongoing delay in passing the FY22 Defense Appropriations bill and the
ongoing Continuing Resolution (CR) extended by Congress until February 18, 2022
• The protracted delay in getting the final budget dollars in place (despite the $740B Defense Authorization bill being signed
into law on December 27) has had the impact of pushing some of RADA’s revenue recognition to the right into its 2022
• This week, Senate Minority Leader Mitch McConnell indicated that the final Appropriations bills for FY22 would be passed by
late February-early March
Friday, January 7, 2022
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
2INDUSTRY UPDATE
Oil
Market
• WTI (February) is up 0.9% to $80.19 and Brent (March) is up 1.0% to $82.78
• Oil is up for the fifth consecutive session, with WTI on track for its third straight weekly gain
• WTI has gained well over 6% for this week alone and has pushed through the $80/barrel mark (which it has not seen
consistently since mid-November in the days before the emergence of Omicron)
• In addition to a less-worrisome Covid outlook, the market this week has been considering various supply issues, especially
the possible impact of social and political unrest in Kazakhstan
• Moreover, there have been some disruptions in Canada's oil sands and North Dakota's Bakken shale region due to cold
temperatures, and output in Libya has dropped sharply on pipeline maintenance work
Kazakhstan – Bloomberg/Platts/Reuters
• Unrest continues in Kazakhstan despite the arrival of 2,500 Russian and allied troops, with President Kassyn-Jomart Tokayev
saying order has largely been restored by pledging to continue a crackdown on what he characterizes as foreign-trained
terrorists
• Today he said militants have not laid down arms and that security forces should shoot to kill and that the fight "must be
pursued to the end."
• Amid the strife there are signs that oil output has indeed been impacted after several days of reports of normal operation
• The Tengizchevroil consortium (which includes XOM and CVX and operates the country's largest field) emailed a statement
yesterday that contract workers were gathered in support of the protestors and consequently there has been a "temporary
adjustment to output due to logistics"
Iran – Reuters
• French Foreign Minister Jean-Yves Le Drian said today that "bits of progress have been made in the last few days" at indirect
talks between the US and Iran in Vienna on returning Tehran to the 2015 nuclear pact
• Le Drian added, however, that time may be running out, remarking "if we don't get an accord quickly there will be nothing to
negotiate."
• The article notes that a positive development this week has been the arrival in Vienna of a South Korean diplomat hoping to
discuss the possible release of $7B in frozen Iranian assets held in that country due to US sanctions
Source: FactSet
Friday, January 7, 2022
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
3MORNING INK REPORT
Is it too late to consider buying energy stocks?
Source: INK Research
As of: Thursday, January 6, 2022
Company Highlight: Peyto Exploration and Development (PEY)
• The question on the minds of many investors is whether it is too late to get into energy stocks given their outsized move in
2021 with the S&P/TSX Capped Energy Index rallying 80%
• We like the adage that beseeches us to focus on where a stock is expected to go, not where it has been
• That said, the past can provide insight. Our INK Edge outlook process includes two backwards-looking core factor categories:
price momentum and trailing 12-month valuations (except dividend yield)
• To assess whether these historical indicators are pointing to future opportunity, we rely on insider signals
• Generally, if we see net buying on the back of positive price momentum or valuations, we view that as a positive sign
• We see an example in early 2022 at natural gas focused Peyto Exploration and Development (PEY)
• Insider buying including options has been net positive in volume and dollar amounts and this comes after the stock gained
more than 200% over the past 12 months
• Meanwhile, valuations are relatively low, including a trailing 12-month price-to-cash flow ratio of 4.2 and a forward-looking
dividend yield of 6%
• The company reinstated a monthly dividend of 5 cents per share in November on the back of improved profitability
• Although many oil & gas stocks including Peyto fell on Wednesday in the wake of hawkish Fed minutes, the Energy Index rose
yesterday (0.5%), thanks to rallies in Canadian big oil, namely Suncor (Sunny; SU), +0.8%, and Canadian Natural Resources
(Mixed; CNQ), +1.2%
• That suggests to us that some big investors were looking to quickly allocate money away from big tech and into energy
• While we are in the early days of 2022, the Energy sector is starting 2022 right where it left off last year, leading the market
Peyto Exploration and Development Chart (PEY)
Source: INK Research
Friday, January 7, 2022
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
4MARKET MOVERS
Source: FactSet
Friday, January 7, 2022
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
5ASSET CLASS PERFORMANCE
Source: FactSet
*All numbers presented on the table below are based on total return
Friday, January 7, 2022
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
6MACRO-EVENT SCHEDULE
Source: Bloomberg Finance L.P.
EARNINGS
Source: Yahoo Finance
Friday, January 7, 2022
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
7MOST READ NEWS
Source: Bloomberg Finance L.P.
1)U.S. Futures Drop on Spike in Wages; Bonds Fall: Markets Wrap
2)Bitcoin Hits Lowest Since September in Drop of 40% From Record
3)Goldman Sachs Sees ‘New Conundrum’ Capping Treasury Yields Surge
4)China’s Shocking Start to 2022 Pressures Beijing to Calm Markets
5)Euro-Area Inflation Unexpectedly Hits Record in Test for ECB
6)China Urges Banks to Boost Property Lending on Default Fears
7)Sleepless Bond Traders Face Worst Start to a Year in Decades
8)Follow U.S. Employment Report for December in Real Time
9)Wall Street’s IBuying Spree Is Eating Up Starter Homes
10)U.S. Adds 199,000 Jobs, Less Than Half of Estimates
THE LAST DROP: “You must expect great things of yourself before you can do them.”
- Michael Jordan
Friday, January 7, 2022
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
8Appendix: Important Disclosures
While this product is drawn from sources believed to be reliable, the accuracy and completeness of the information contained herein is not guaranteed. Any reference
to a research report or a recommendation is not a solicitation to purchase or sell any security and it does not consider the individual investment objectives, financial
situation, suitability or risk tolerance of any person or corporation. Accordingly, investors should obtain advice based on their own specific circumstances before making
any investment decision. Canaccord Genuity Wealth Management is a division of Canaccord Genuity Corp. Member – Canadian Investor Protection Fund (CIPF) and the
Investment Industry Regulatory Organization of Canada (IIROC).
Quest®: Canaccord Genuity’s proprietary online valuation and analytical tool which combines consensus market figures with the Quest® Discounted Cash Flow (DCF)
Valuation Model.
Quest® triAngle is Canaccord Genuity’s proprietary 15-factor, stock-picking tool, which systematically measures Value, Quality and Momentum and presents the results
in a simple, easy to understand score. It takes a multi-pronged approach to Value, Quality and Momentum using five factors for each component, which adds more
consistency of performance unlike a reliance on one single measure. It uses a mix of historic and forecast data, and combines absolute valuation data with comparisons
relative to history. The triAngle is designed to generate stock ideas and provide a consistent framework for analysis of portfolio holdings.
Quest® Methodology
Quest® is an analytical tool that involves use of a set of proprietary quantitative algorithms and value calculations to derive a number of corporate performance and
valuation metrics, including assigning a Default Quest® value per share and generating a triAngle Score, which is a relative ranking based on a number of operational
and valuation metrics. These algorithms and value calculations are consistently applied to all the companies included in the Quest® database. Third-party data (including
consensus earnings estimates) are systematically translated into a number of default variables and incorporated into the algorithms. The source financial statement,
pricing, and earnings data provided by outside data vendors are subject to quality control and may also be adjusted to more closely measure the underlying economics
of firm performance. These adjustments provide consistency when analyzing a single company across time, or analyzing multiple companies across industries or national
borders. As the third-party data are updated, the triAngle Score generated by Quest®, and the Default Quest® value per share may change. The default variables may
also be adjusted by the user to produce alternative values, any of which could occur. Additional information about the Quest® methodology is available on request.
Canaccord Genuity Quest® Disclosures
Quest® is at this stage registered in the UK and in the USA, and common law trade mark rights are asserted in other jurisdictions. Quest® is non-independent research
and is a marketing communication under the FCA Conduct of Business rules. All rights reserved. Quest®, CITN®, Companies in the News™, CFROC®, and triAngle™ are
all trademarks of Canaccord Genuity Limited. E&OE. © Canaccord Genuity Limited. For important information and company-specific Quest® disclosures please see
Important Disclosures at the following website (provided as a hyperlink if this report is being read electronically): https://disclosuresquest.canaccordgenuity.com/.
Please note that analyst data and Quest® data may differ due to different sources and calculation methods. The Quest® platform may be found at the following website
www.canaccordquest.com
* Canaccord Genuity and its affiliated companies may have a Corporate Finance or other relationship with the company and may trade in any of the Designated
Investments mentioned herein either for their own account or the accounts of their customers, in good faith and in the normal course of market making. The authors
have not received, and will not receive, compensation that is directly based upon or linked to one or more specific Corporate Finance activities, or to coverage contained
in the Morning Coffee.
Canaccord Genuity is the global capital markets group of Canaccord Genuity Group Inc. (CF : TSX)
The recommendations and opinions expressed in this research report accurately reflect the Investment Analyst’s personal, independent and objective views about any
and all the Designated Investments and Relevant Issuers discussed herein.
Canaccord Genuity (Australia) Limited is the Australian affiliate of global capital markets group Canaccord Genuity Group Inc. (CF : TSX). The recommendations and
opinions expressed in this research report accurately reflect the Analyst’s personal, independent and objective views about any and all the designated investments and
relevant issuers discussed herein.
Friday, January 7, 2022
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
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