Good morning!

White Gold is proving again that it's a cut above other junior companies. Keep reading to see the deal the Yukon explorer has cut with Kinross. White Gold's shares have risen about 33% since our feature on the company in mid-March. 

White Gold ties into our Capital Ideas Digest cover story this coming Tuesday detailing why the mining sector is at the dawn of a new megacycle. 

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Check our interview section for recent talks with top managers, analysts and business leaders. capitalideasresearch.com/interviews/

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

May 19, 2017 

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

MARKETS

Canada’s main stock index futures were trading higher after inflation and retail sales data. Wall Street was set for a positive start as investors shrugged off concerns over U.S. President Donald Trump’s political future. European shares recovered from heavy losses suffered this week, while Asian shares ended broadly higher.

Starting today, Trump will take his show on the road for eight days  to the Middle East and Europe. 

In economic data, Statistics Canada said Canada's annual rate of inflation held steady at 1.6% in April, matching the previous month. Economists had been expecting a gain 1.8%. Also, March retail sales rose 0.7% on strength in motor vehicles and auto parts sectors. The market had been forecasting a gain of 0.3%.

CURRENCIES

The Canadian dollar is up a third of a cent at $0.7372 U.S. 

The U.S. dollar is lower near six-month lows amid its worst week since August. 

COMMODITIES

West Texas Intermediate oil has broken $50 a barrel for the first time in a month.

Gold is holding steady $1,253.20 amid its strongest week since April.  

STOCKS THAT MAY MOVE 

Hydro One's (H-T) Investment banks that underwrote the company's $2.8 billion (Canadian) equity sale are making a second attempt at selling a large chunk of the shares after investors balked at the initial deal, according to the Globe and Mail. That's after weak investor demand for the issue left underwriters holding nearly half of the shares being offered. Investment banks led by Royal Bank of Canada and Canadian Imperial Bank of Commerce priced the remaining shares, amounting to 42% of the total deal, at $22.60 each.

Bombardier Inc (BBD.B-T) Canada suggested on it could scrap plans to buy Boeing Co fighter jets if the United States backed Boeing's claims that the Canadian plane maker dumped jetliners in the U.S. market. "Canada is reviewing current military procurement that relates to Boeing," Canadian Foreign Minister Chrystia Freeland said. Canada "strongly disagrees" with the U.S. Commerce Department decision to investigate Boeing's claims that Bombardier sold planes below cost in the United States and benefited unfairly from Canadian government subsidies.

Home Capital Group Inc (HCG-T) The non-bank lender published data showing that its high interest savings account balances had risen on Wednesday but its cashable guaranteed income certificate deposits continued to fall. 

Deere & Co (DE-N) is higher by 9% pre-market after it reported a bigger-than-expected 62% jump in quarterly profit, as sales rose for the first time in 13 quarters on improving demand for its farm and construction equipment.

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.

White Gold (WGO-V) More evidence that this Yukon gold explorer plays in a different league than other juniors. Agnico Eagle already owned 19.9% of White Gold, featured in our PDAC issue in March, and now Kinross has taken an identical stake by selling all of its Yukon properties to White Gold in exchange for cash, shares and milestones payments equalling more than $60 million - $45.2 million of that up front. 

Kinross (K-T) GMP maintains a Buy rating and a target of $7.20, suggesting 25% upside. 

(Read more about White Gold here capitalideasresearch.com/digest/page/2/)

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Savaria (SIS-T) was a 5i Research Peter Hodson pick in our August 1, 2016  issue. It's been a great recommendation with the stock up nearly 70% since then. GMP raises the price target to $18.25 from $17 (current price is $14.63), maintains Buy and boosts EPS estimates after the company made a $29 (U.S.) per share friendly bid for Span-America (SPAN-O), a South Carolina manufacturer of mattresses, beds and related products targeted at the long-term care and acute care markets. Laurentian Bank also boosts the target to $18.25, raises EPS estimates and maintains Buy.

Founders Advantage Capital (FCF-V) Desjardins Capital Markets maintains Buy rating and price target of $4.50, current price is $2.90, after the company raised its EBITDA forecast. Founders is expected to release its quarterly earnings results on May 29 after the market close. 

Air Canada (AC-T) Beacon Securities boosts the target to $21 from $15.25, maintains Buy.

Nanotech Security (NTS-V) Canaccord Genuity raises the target to $2 from $1.75. Current price is $1.29. Maintains Speculative Buy. 

Hudbay Minerals Inc (HBM-T) Barclays cuts price target to $10 from $11; rating Equal weight.

Lundin Mining Corp (LUN-T) Berenberg raises target price to $9 from $8 citing strong net cash status, which puts it in a unique position relative to peers.

INITIATIONS

GoGold Resources (GGD-T) Cantor Fitzgerald starts coverage with a Buy and a price target of $1.80, implying 200% upside, calling the company a "a low cost silver producer with near term gold production for free". 

U.S. ANALYSTS' CALLS

Autodesk (ADSK-O) RBC upgrades to Outperform, boosts the price target to $125 (U.S.) from $95, implying 30% upside. Canaccord boosts target to $120 from $105.

Salesforce.com (CRM-N) Canaccord lifts target to $100 from $95, maintains Buy. 

Alibaba (BABA-N) RBC raises the price target to $140 from $120, indicating 15% upside, maintains Outperform after a "strong March quarter". 

Applied Materials (AMAT-O) Cowen and Company raises target to $50 from $45; rating Outperform saying that the company is in a sweet spot to capture more of the spending mix as customers adopt new transistor architectures.

Lumber Liquidators Holdings Inc (LL-N) Oppenheimer raises rating to Outperform from Perform mentioning that a potentially prolonged recovery at the company is starting to take shape under the leadership of a new senior management.

Walmart (WMT-N) Susquehanna raises price target to $92 from $80; rating Positive mentioning that the company is emerging as the leading omnichannel retailer and is gaining traction.

DEALS

Laurentian Bank of Canada (LB-T) is buying Georgia-based Northpoint Commercial Finance, an inventory finance lender with a $1.2-bilion portfolio. The bank will finance the acquisition through a $225 million subscription receipts equity financing, at $51.70 a share, and its existing balance sheet. The bank didn't disclose the price of the acquisition.

What We're Reading

Short-selling guru James Chanos on how to profit from the drug pricing backlash and why he still hates Tesla. marketwatch.com/story/jim-chanos-has-a-way-to-profit-on-the-drug-overpricing-backlash-and-still-hates-tesla-2017-05-19

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Have a great long weekend!

Mark Bunting | Publisher 
Capital Ideas Research