Futures give back, Google pops, Intel plops, Celestica falls, Agnico beats
If anyone is watching Severance please reach out directly as I have many urgent questions about the season finale. I feel like I may be getting lured into a no-payoff situation like Lost and I can’t go through that again.
Are Canadian stocks finally having their moment? In this episode of In the Money with Amber Kanwar, Garey Aitken, Head of Canadian Equities at Franklin Templeton’s ClearBridge Investments. He manages an $8 billion fund dedicated to Canadian stocks. He breaks down the “sell America, buy Canada” trend, shares 8 Canadian stocks he believes have a clear edge right now, and gives his perspective on the upcoming proxy battle at Parkland (he’s a major shareholder). Tune in!
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In flux: Futures are pumping the breaks this morning after a three-day rally on the S&P 500 (the first time since Feb 2023 markets advanced +1% three days in a row). This morning we are getting mixed signals on trade and earnings are pulling us in two different directions. Media reports suggested China was considering suspending the 125% tariff on some US imports but that was contradicted by Chinese officials. Shares of Google are higher in the pre-market while Intel falls on earnings (more on both below). We just got a read of retail sales in Canada that showed consumer spending unexpectedly increased in February and March. In fact the flash estimate for March suggests shoppers were out in full force with spending the highest since the holiday season. The rebound in March should keep retail sales for the quarter in positive territory but the initial weakness at the beginning of the year means overall growth for Q1 is still the weakest since the second quarter of last year.
ABCs: Shares of Alphabet are popping 4% in the pre-market after sales and profit beat expectations and it boosted its dividend by 5%. Search revenue increased 10% and the company showed progress on its AI initiatives. Google now boasts 1.5 billion users per month of its “AI overview” – the summaries at the top of your google searches. “With Gemini powering most all of Google’s largest products, we believe Google’s GenAI search tools are gaining traction,” wrote Citi’s Ronald Josey. Alphabet has been in the penalty box as the sell-off in Magnificent 7 stocks has weighed on shares. There is also the DOJ overhang – concerns that the company won’t be able to pay for search placements. Evercore’s Mark Mahaney thinks this worse case scenario is unlikely to pass and expects remediations to be announced by a judge in late summer. “GOOGL is a Classic (Dislocated High Quality) stock – off almost 20% from recent highs and trading close to multi-year trough levels on P/E and EV/EBITDA,” wrote Mahaney. Next up for the Mag-7 will be the releases from Microsoft, Meta, Amazon and Apple on Wednesday and Thursday next week.
Blah: Shares of Intel are plunging 7% in the pre-market as the embattled semiconductor put out a kitchen sink quarter. In the first report for new CEO Lip-Bu Tan did his best to reset the bar, and it is low. Intel confirmed job cuts were coming and warned that sales in the upcoming quarter were going to be much lower than expected. It promised to reduce spending this year and next. Quarterly results this quarter actually came in better than expected, but the outlook is weighing on the stock. Analyst reports this morning carry headlines like “Road to Recovery Remains Long” (Stifel) and “Turnaround will take time” (Raymond James).
Missed connection: Shares of Celestica are dropping in the pre-market even as it beat quarterly profit expectations and raised their forecast for the year. However, the sales forecast was already where consensus was. That seems to be the main reason for pressure on the stock because under the hood the numbers look pretty good. Sales grew 20%, much more than expected, while its profit forecast was well above expectations. Most analysts are pretty positive on the quarter and like the fact the company raised its forecast despite macro uncertainty. “Celestica has historically provided conservative guidance; Celestica’s FY24 adj. EPS ($3.88) was 44% above its initial guidance for $2.70,” wrote RBC’s Paul Treiber.
Fly like an eagle: Shares of Agnico Eagle are dipping despite stronger than expected earnings and higher than expected production. The gold miner also maintained its forecast for the year. The quarter was a classic Agnico quarter with no major hiccups and stronger results than expected results. “Our analysis reinforces our view of Agnico as a core-holding among senior precious metals producers given its size, liquidity and multi-mine geographical presence with a regional focus on maintaining multi-decade geologic potential,” wrote Stifel’s Ralph Profiti.
