Cisco is trading at its highest level since 2000 and just 10 per cent away from reaching its record high.Nacho Doce/Reuters
The dog days of summer are here. The kids have been begging for a dog, so I caved and got a fish instead. I figured it would be a starter kit in responsibility. So far, the adults are the only ones who remember to feed the poor thing, and the kids keep asking if we can scoop it out so it can watch TV with us.
Here are five things to know this week:
Movers and shakers: The TSX put in its best weekly showing since September, 2024 despite worse-than-feared job growth in Canada. The index was able to put that aside as gold stocks surged to a record high and Shopify SHOP-T popped more than 20 per cent after results came in higher than expected.
The U.S. markets managed to shake off a huge downward revision to the labour market. The S&P 500 rallied on tech stock strength and hopes of relaxed monetary policy. The odds of a September rate cut are at 90 per cent.
The test will come in the form of two inflation prints this week: consumer price inflation and producer price inflation. Lately, consumer price inflation has been coming in lower than expected, with the Citi Inflation Surprise Index for the U.S. near a 10-year low, emboldening those calling for rate cuts.
Party like it’s 1999: Cisco Systems Inc. CSCO-Q is trading at the highest level since May 2000 and is 10 per cent away from reclaiming its record high. It would be easy to say this is because of AI, but the truth is we haven’t seen the full force show up in results, and sales this year are poised to grow a tepid five per cent.
Cisco is due to report on Wednesday. Disruption from tariffs and reduced government spending are still potential headwinds. However, all eyes will be on the forecast.
“Cisco should continue to see order strength in data center but we note AI related infrastructure rev is not expected to accrue until next quarter,” UBS stock analyst David Vogt wrote in a preview note to clients.
He said AI demand is coming, and in the meantime, the stock is cheap despite the rally, noting it trades at 16-times forward earnings compared to AI infrastructure peers, which trade at 30-times earnings.
M&A at H&R: Multi-asset real estate investment trust H&R REIT HR-UN-T is set to report results Wednesday and may boost its dividend. But investors will likely be more interested in where they are in their strategic review, especially after The Globe reported that Blackstone and the Public Sector Pension Investment Board, among others, were interested in buying the company.
The stock jumped on the report but has been coming down ahead of earnings. H&R is made up of a mix of residential, office, retail and industrial assets, which may make finding a buyer a little trickier, according to shareholder Michael Missaghie of Arch Corporation.
“You usually have to get a collection of buyers – somebody who wants the office, somebody who wants the retail,” he said on my podcast.
As for the premium? InterRent REIT’s IIP-UN-T most recent transaction slightly below its net asset value is likely a playbook for H&R REIT, says Missaghie. He pushed for the sale of InterRent and he pegs H&R’s net asset value around $14 to $15 a share.
Back nine: Barrick Mining Corp. ABX-T is trading at a three-year high as it gets set to report results Monday. The mining giant was slow to participate in the gold trade but started to get moving after bottoming mid-May. Gold prices are sharply higher than they were the last time Barrick reported.
Analysts don’t expect a clean sweep, especially because one of Barrick’s key mines in Mali has been halted since January due to a dispute with the government. Investors will be keen to hear about any positive developments here while bracing for additional impairment charges. Barrick acknowledged challenges in the first half of the year but said they would make them up in the back half of the year.
Now that we are in the back half, will Barrick be able to deliver? Deal flow may also come up on the call, although CEO Mark Bristow has championed no-premium deals. As a result, “he’s not done a single deal in seven years,” said Ross Beaty, executive chairman of Equinox Gold on my podcast this week.
“One of the reasons Barrick’s underperformed is exactly that, not to mention calamities like they had in Mali,” said Beaty. The episode will come out on Tuesday morning.
Price check: Metro Inc. MRU-T reports Wednesday and may benefit from re-accelerating food inflation. Although, when Empire Company Ltd. EMP-A-T and Loblaw Companies Ltd. L-T reported results, they both showed internal inflation below the Consumer Price Index.
However, the “buy Canadian” trend could show up in the increase of goods purchased, said BMO’s Tamy Chen in a preview note to clients. “We are monitoring promotional intensity. We have recently observed some uptick in Walmart Canada’s price rollback actions,” she wrote.
In the Money with Amber Kanwar brings you insights from top portfolio managers and business leaders. Listen at www.inthemoneypod.com