Top Stock Picks for 2024 from Haywood

In a research report to clients January 11, Haywood Capital Markets released its Top Picks for 2024 in three different sectors, Energy, Mining, and Special Situations/Technology.

“Last year was a strong year for U.S. equity indices with more moderate follow through in Canada,” the report opened. “The S&P 500 was up 24% for the year while the Nasdaq jumped 54%, recouping losses from 2022 and lead by the magnificent seven. The TSX however was only able to post a gain of 8% in 2023. With inflation appearing to be settling down, banks have paused raising interest rates with speculation for potential rate cuts in the back half of 2024. A moderately lower U.S. dollar is likely to lead to a rise in commodity prices. With an uncertain macro environment, investors should be monitoring the health of the underlying economy, to assess whether we are indeed headed for a soft landing or a recession that is likely to create some volatility over the course of the year as we get more visibility on the health of the economy. A declining interest rate environment in H2/24 could be supportive of small-cap stocks.”

Analyst Neal Gilmer, who covers the cannabis sector, explained what he thinks are the big takeaways for 2024 in that sector.

“While we believe that federal cannabis reform is a when not if issue, developments at the state level present growth opportunities in 2024 and beyond. There are several states that are still in the infancy of rolling out commercial markets, others in the process of implementing new markets, and a few with the prospect to pass some form of legalization in 2024. Cannabis stocks continue to trade at an attractive valuation relative to S&P 500 and major CPG alcohol businesses,” he said.

His top pick in the cannabis sector is Green Thumb Industries (Green Thumb Industries Stock Quote, Chart, News, Analysts, Financials CSE:GTII).

“Our Top Pick for Cannabis Sector is Green Thumb Industries (GTI) for 2024 given the health of its balance sheet, operational track record and attractive footprint,” Gilmer wrote. “These key elements should enable GTI to navigate any near-term volatility associated with potential headline relating to federal reform. Green Thumb’s footprint in adult-use markets that recently commended as well as those expected to pass adult0use legalization should drive grwoth well beyond 2024.”

Gilmer currently has a “buy” rating on the stock and a price target of $19.50, implying a return of 34 per cent at the time of publication.

Gianluca Tucci, who covers the gaming sector, summed up that space at this moment.

At a high level, YTD through October 2023, USA has generated US$54.4B in GGR (+9.6% growth), according to the American Gaming Association,” he wrote. “The high growth areas of sports betting and iGaming grew 50.8% and 23.1%, respectively. We look for continued online gambling regulatory movement in 2024, further supporting overall growth rates and expect the segments of sports betting and iGaming to continue leading growth.

Tucci’s “Top Pick” for 2024 is Bragg Gaming (Bragg Gaming Stock Quote, Chart, News, Analysts, Financials TSX:BRAG).

“BRAG has been hard at work building a foundation for scalable growth and one that delivers on shareholder value,” the analyst said. “Along with momentous fundamental improvement over the last year, BRAG’s Industry has seen notable consolidation, with deal such as Aristocrat purchasing NeoGames for 4.5x EV/Rev and 14.7x EV/EBITDA, Light&Wonder acquiring the SciPlay shares it does not own, valuing the business at 3.3x EV/Rev and 12x EV/EBITDA. and Sega Sammy acquiring money losing GAN for ~US $100M. BRAG has scaled into a must have content supplier for online casino operators who continues to trade at materially undervalued multiples.”

Tucci has a “Buy” rating and price target of $15.00 on BRAG, implying a return of 119 per cent at the time of publication.