Who wants to follow the herd when you can stand out?

There is consensus when it comes to corporate earnings and stock price targets, and there are outliers.

Those analysts who have conviction the consensus is incorrect and that certain companies will outperform or underperform based on a variety of factors that some may be under-appreciating or unaware of.

We have access to some concise research on three outlier stocks that could gain as much as 78 per cent over the next 12 months.


by TD Securities

We are pleased to bring you our 75th edition of The Outlier Report.

This compendium provides a selection of companies for which our quarterly or full year estimates vary meaningfully from consensus.

The goal of this publication is to highlight some potential outliers before they become yesterday’s news.

We are also featuring select names where our target prices are significantly above or below the consensus.

These brief summaries should be viewed as an additional tool, and not as the sole basis for action.

Although EPS announcements end to receive a great deal of attention, we recognize that these reports do not tell the whole story.

In some cases, we may continue to be positive on a stock despite a below-consensus forecast and vice versa.

ARC Resources Ltd. (ARX-TSX) 

ARC Resources Ltd. is a dividend-paying oil and gas producer, and is approximately 65% weighted to natural gas.

The principal areas of operations are in northeast B.C. and Alberta.

Our target price of $29.00 is 17% above consensus and tied for the high target on the street.

Potential 12-month upside: 77%

Our BUY recommendation is based on several key factors:

  • ARX has underperformed its closest peers since the beginning of 2023.


  • We do not believe that this is the result of operational issues.


  • Year-to-date, the company’s shares are down ~8% versus its closest peer (TOU – ~0%) and the broader Montney peer group at ~-4%.


  • Although this does not impact our target, it has resulted in outsized return expectations relative to its peers.


  • From a valuation perspective, ARX currently trades at a 2023 estimated enterprise value to discounted cash flow (EV/DACF) of 3.1x versus TOU at 5.0x and the broader Montney-focused peer group at 3.4x.


  • Given the scale of core assets in B.C., in our view, ARX stands to be one of the largest beneficiaries of the newly negotiated resolution to the Treaty 8 regulatory uncertainty in B.C.


  • We believe the company will gain from growing clarity around development, moving closer to providing significant liquids-rich production growth on its Attachie asset.


  • We continue to recommend investors tilt portfolios towards larger, liquids-rich companies given that we expected volatility in natural gas pricing until additional North American liquified natural gas (LNG) exports comes on line late 2024+.


  • Although some might think of ARX as primarily a natural gas producer, ARX is Canada’s largest condensate producer and only derives ~39% (2023 estimated) of revenue from natural gas.


  • In addition, the company’s gas marketing strategy is well diversified with large exposure to markets outside of AECO including the Henry Hub (HH), the U.S. Midwest, Eastern Canada, California, and eventually JKM LNG pricing in 2026+.


  • We forecast a 2023 free cash flow (FCF) yield of 19% versus an average of 16% across our Canadian exploration and production (E&P) coverage.


  • ARX is now returning significant capital to shareholders in the form of a base dividend (4% yield) and share buybacks.


  • Assuming $75/barrel west Texas Intermediate (WTI) and $4.00 HH, we estimate the company will buyback 8% of its shares outstanding this year.ARX offers dominant exposure to high-quality, liquids-rich assets with emerging upside to a significant growth prospect at Attachie now that a path to continued development in B.C. has been put in place.
    Brookfield Corp. (BN-NYSE, BN-TSX)

    Brookfield Corporation is focused on deploying its capital on a value basis and compounding that capital over the long term across three core pillars: asset management, insurance solutions, and operating businesses.

    Our 12-month target price for BN is US$63.00, substantially above the consensus target price of $48.43 (range of $31.00-$63.00).

    Potential 12-month upside: 78%

    • We use a sum-of-the-parts valuation methodology, and we believe that the variance between our target price versus consensus is primarily due to the valuation multiple that we ascribe to fee-related earnings (FRE).


    • BN owns 75% of Brookfield Asset Management Ltd. (BAM-NYSE:BAM:TSX), after distributing and publicly listing a 25% stake in early-December.


    • We value BAM’s FRE based on a 25x multiple, which we believe is well-supported by the fact that ~85% of its fee-bearing capital is either very long-term and/or perpetual, and the franchise is growing at ~20% per year.


    • Every 1x multiple turn on BAM’s FRE equates to ~$1.00-$1.50 per BN share.


    • BN retained the historical carried interest, which has reached a key inflection point, whereby at least one fund from each flagship series is now generating realized carried interest.


    • Given the current macro backdrop, we assign zero value to carried interest in our target price, even though carried interest contributed trailing 12-month distributable earnings of ~$0.25/share and has an accumulated but unrealized balance of ~$3.50/share.


    • We value the publicly-traded affiliates, BEP, BIP, and BBU using target prices for BEP and BIP, and the unit price for BBU.


    • We value the real-estate portfolio at a ~30% discount to international financial reporting standards (IFRS), which is consistent with the discount at which Brookfield privatized BPY in mid-2021.


We use IFRS values for the insurance business and the other unlisted assets.

TD Investment Conclusion

We believe that BN offers substantial upside potential.

After subtracting the market value of the company’s stakes in BAM, BEP, BIP, and BBU, the current share-price assigns little-to-no value to:

  • Carried interest;
  • The real-estate portfolio, which includes a number of marquee assets;
  • The insurance business; and/or
  • The potential for accretive capital allocation.

We highlight that Brookfield’s senior executives are heavily invested in BN, and therefore highly aligned with shareholders, such that we expect BN to repurchase shares if they trade at a discount to intrinsic value, up to and including the potential for a significant issuer bid.

Teck Resources Ltd. (TECK.B-T, TECK-N)

Teck is a diversified mining company headquartered in Canada.

The company is a significant producer of metallurgical coal, copper, and zinc. It has interests in several oil sands development assets.

Our C$67.00 target price is 17% above the median consensus target of $57.50.

Potential 12-month upside: 20%

We believe the variances between our target price and consensus are largely driven by our positive outlook on steelmaking coal, partially offset by our slightly lower long-term copper and zinc price outlook.

Our views on steelmaking coal reflect commentary from major seaborne coal suppliers, which have been pledging not to increase production levels over the medium-to-longer-term.

According to Teck Resources, seaborne steelmaking coal supplies from major countries have decreased by 12 million tonnes (Mt) since 2019 and seaborne steelmaking coal supply is expected to peak in 2027.

By 2027, supply is forecast to increase by 37Mt over 2022 levels, but demand is expected to grow by 44Mt.

Supply growth is constrained by reduced investor and societal appetite for coal, which, in turn, is leading to producers reducing investment into the sector.

Based on current trends, we believe that a significant supply gap will open up in the steelmaking coal market by 2030.

Our understanding is our 2024 and long-term steelmaking coal price assumption of US$235/t and US$200/t is on the higher end of consensus (with the median at ~US $183/t for 2024 and ~US$162/t long-term).

Based on McCloskey and Platts pricing, we calculate the weekly average price to be ~US$220/t over the past five years and ~US$180/t over the past 10 years.

We are slightly below consensus 2023 earnings before interest, taxes, depreciation and amortization (EBITDA) at $7.401 billion (Capital IQ consensus $7.85 billion).

Our 2024 EBITDA estimate is higher than consensus at $8.52 billion (Capital IQ consensus $7.94 billion), which we principally attribute to our higher steelmaking coal price forecast.

Despite our higher long-term steelmaking coal price, our net asset value (NAV) is effectively in line with consensus at $50.20/sh (Capital IQ consensus $49.56/sh).

Our annual average coking coal sale assumption of 25.5 million metric tonnes (mmt) for 2025-2027 is in line with consensus and consistent with management’s latest guidance and commentary on its longer-term expectations for the coal business.

TD Investment Conclusion

We are maintaining our BUY recommendation and target of C$67.00.


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