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We're working on a cover story on a junior exploration company that has it all.

High grade gold, safe jurisdiction, management and insiders, such as Eric Sprott, own more than 50%, and $20 million in the bank. The chairman tells us  - in so many words - that the company will probably get taken out before it reaches commercial production. Watch for this intriguing investment idea in the next Capital Ideas Digest. capitalideasresearch.com


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Keep reading for five stocks with dividend yields of more than 5% from our friends at 5i Research. 

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Morning Need to Know by Capital Ideas Research
Getting you ready for your investing day

April 20, 2017 

Written and compiled by Mark Bunting, Publisher, Capital Ideas Research

MARKETS

TSX and U.S. stock futures were pointing to gains this morning after stock indices were mostly lower Wednesday. 

World stocks eked out small gains as investors resisted risky bets ahead of the first round of the French presidential election over the weekend.

The Stoxx Europe 600 Index struggled for direction despite a rally in food producers after Unilever NV and Nestle SA results beat estimates.

The Shanghai Composite Index has not fallen more than 1 percent in 84 trading sessions, the longest stretch of its kind since 1992. Investors are interpreting the trend as owing to state-directed funds putting a floor under daily market swings. 

Japan’s Topix index added 0.1 percent. The Hang Seng advanced 1%, Australia’s S&P/ASX 200 Index climbed 0.3% and South Korea’s Kospi index was up 0.5%.

CURRENCIES

The U.S. dollar index fell 0.1% after rising 0.5% Wednesday. 

The Canadian dollar is drifting lower to $0.7411 U.S.

The pound rose 0.2% to $1.2799 and the euro climbed 0.3% to $1.0746.

The yen advanced 0.2% to 109.06 per dollar, following a 0.4% decline on Wednesday.

BONDS

The yield on 10-year Treasuries rose one basis point to 2.22 after a five basis point advance Wednesday.

COMMODITIES

West Texas Intermediate oil increased slightly to $50.59 a barrel, after tumbling 3.8% Wednesday after a report showed U.S. gasoline supplies increased for the first time since February, while crude output keeps rising.

Gold fell 1.3 percent to $1,282.10 an ounce.

STOCKS THAT MAY MOVE 

Home Capital Group (HCG-T). The alternative mortgage lender and three former or current executives, including former CEO Gerald Soloway, have been accused by the Ontario Securities Commission of making false and misleading statements. The company says the charges are "without merit" and will be "vigorously defended".

Westjet Airlines (WJA-T) says it's going to start a new, inexpensive no-frills airline later this year, starting with 10 Boeing 737-800 jets. 

TransAlta Corp. (TA-T, TAX-N) The board has approved a strategy to "...accelerate the transition of the company to gas and renewables generation. The company is taking steps today that will position us as a leader in clean power generation and improve our competitive position as we consider a future where carbon is a high cost input to power generation," said CEO Dawn Farrell.

Mullen Group Ltd. (MTL-T) reported first quarter revenue of $284.9 (Canadian) million, up 5 per cent compared to the same period in 2016. Net income was $14.5 million or 14 cents per share compared to 23 cents a year earlier. Analysts were expecting revenue of $295.7 million and earnings of 14 cents.

"After two years of reporting declining revenues we are finally starting to experience some growth...representing that some early stage stability is returning to the battered oil and natural gas service industry as well as reinforcing our acquisition strategy," said CEO Murray K. Mullen.

Slate Office REIT (SOT.UN-T) is buying a suburban office complex in Etobicoke, Ont. for $95 million. The asset is being sold by Dream Office REIT (D.UN-T) and Dream Hard Asset Alternative Trust (DRA.UN-T). 

Celestica (CLS-T) Q2 revenue outlook matches midpoint of analysts' estimates.

CANADIAN ANALYSTS' CALLS

This is an overview of some of today's analyst research. We'll have more details on many of these reports in the next Digest.

INITIATIONS

Mogo Finance Technology (MOGO-T) Mackie Research starts coverage with a Speculative Buy and a price target of $6, giving the shares potential upside of 79%. 

"We expect high margin fee revenue of ~$8 million in 2018, up ~600% year-over-year. Member growth, loan book & new products to drive revenue growth after 2016 new product launch focus. Mogo has ~350K members (Q4/2016). We model ~600K by Q4/2018 and believe Mogo could organically reach one million members in ~three years."

Theratechnologies Inc. (TH-T) CIBC starts coverage with an Outperformer rating and $10 target. The stock currently trades at $6. 

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Canadian Pacific Railway (CP-T, CP-N) CIBC maintains Outperfomer rating and $220 price target. Barclays reduces target to $174 (U.S.) from $177. RBC raises target to $226 (Canadian) from $224, maintains Outperform.

"...cheapest rail in the group, and the inflection point in volumes that we expect will serve as a catalyst. Evidence from the Q1 results and management commentary on the call further reaffirms our view."

Martinrea (MRE-T) RBC raises price target to $16 from $15, implying 69% upside, maintains Outperform. 

Lundin Mining (LUN-T) RBC maintains Outperform and a price target of $11, which implies 57% upside, ahead of the company's earnings results. 

Rogers Communications Inc (RCI.B-T). Barclays raises target price to $63 from $57 expecting near-term momentum to remain strong with a healthy outlook for wireless and likely several more quarters of cable share gain.

Blackline Safety (BLN-V) New Strong Buy at Raymond James, price target $4.50.

EXFO (EXF-T) New Sector Perform at National Bank, price target $5.50.

Home Capital Group (HCG-T) Cut to Market Perform at Raymond James.

Mullen Group (MTL-T) Cut to Sector Perform at National Bank, price target $19.

TransGlobe Energy (TGL-T) Resumed Speculative Buy at Canaccord.
 
Thomson Reuters (TRI-T) New Sell at Berenberg, price target $37.

U.S. ANALYSTS' CALLS

American Express Co (AXP-N) D.A. Davidson raises target price to $85 (U.S.) from $84; Neutral rating due to a modest increase in 2018 earnings per share estimate.

Starbucks (SBUX-O) Stifel Nicolaus upgrades to Buy from Hold, raises price target to $67 from $60. 

EBay Inc (EBAY-O) RBC raises target price to $36 from $34; rating Sector Perform saying that the company continues to show signs of a platform turnaround and has successfully established several new opportunities including offline payments, BRIC (Brazil, Russia, India, China) expansion and eBay Now.

Morgan Stanley (MS-N) Instinet raises target price to $51 from $49; rating Buy to reflect revised estimates after strong first quarter results.

Valeant (VRX-N, VRX-T) JP Morgan cuts target price to $10 from $15 based on lower longer-term growth expectations for a number of the company's core franchises.

EARNINGS

CSX Corp (CSX-N). The railroad where Hunter Harrison nows hangs his hat reported a better-than-expected quarterly net profit driven by rising freight volumes across most of the markets it covers and said it plans to cut costs and boost profitability. Excluding a one-time restructuring charge of $173 million, the company posted earnings per share of 51 cents. Analysts on average had expected 42 cents. Revenue in the first quarter increased 10% to $2.87 billion. That beat analyst expectations of $2.76 billion. CSX is increasing its quarterly dividend by 11%, and has approved a new $1 billion share buyback. 

D.R. Horton Inc (DHI-N). The homebuilder reported a 17.5% rise in quarterly profit, driven by higher home sales. Home sales rose 17.6% to $3.16 billion.

Unilever (UL-N). The consumer goods maker reported a surprise acceleration in quarterly sales, helped by price increases. Unilever said underlying sales rose 2.9% in the first quarter compared to analysts' estimates of 2%. Excluding the struggling margarine and spreads business, which Unilever plans to sell by the end of the year, underlying sales rose 3.4%. Revenue was up 6.1% to 13.3 billion euros, including a foreign exchange boost of 2.4%.

DEALS

High-speed trading firm Virtu Financial Inc (VIRT-O) reached a deal to acquire rival KCG Holdings Inc. (KCG-N) for $1.4 billion in cash, a tie-up that would create an electronic trading giant responsible for around one-fifth of volume in U.S. equities.

WHAT WE'RE READING

Five stocks with dividend yields of more than 5% - from Ryan Modesto of 5i Research. theglobeandmail.com/globe-investor/investment-ideas/research-reports/five-stocks-with-dividends-yields-over-five-percent/article34748068/

Trump rally 2.0 could be around the corner. A technical look. barrons.com/articles/are-you-ready-for-trump-rally-2-0-1492634005?mod=BOL_hp_highlight_1

Is gold's comeback real or just a tease? barrons.com/articles/is-golds-comeback-real-or-just-another-tease-1492465925?mod=BOL_hp_highlight_7

How Amazon can become the first trillion dollar stock as is crushes retail. marketwatch.com/story/how-amazon-will-become-the-first-1-trillion-stock-as-it-wrecks-retail-2017-04-20

Five secrets "Mr. Money Moustache" learned from retiring at 30. marketwatch.com/story/5-secrets-mr-money-mustache-learned-from-retiring-at-30-2017-04-19

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Have a great day!