B 8 O THEGLOBEANDMAIL | WEDNESDAY,SEPTEMBER11,
EYEONEQUITIESDAVIDLEEDER
SNC-LAVALINGROUP(SNC-TSX)
CLOSE$17.92,UP$1.
THESTARSGROUP(TSG-NASDAQ)
CLOSEUS$16.26,DOWN20¢MAJORDRILLING(MDI-TSX)
CLOSE$5.50,UP47¢H20(HEO-TSXVENTURE)
CLOSE$1.20,UP1¢CANADIANNATURAL(CNQ-TSX)
CLOSE$33.76,UP$1.There are “plenty” of potential ca-
talysts forSNC-Lavalin Group
Inc., according to CIBC World
Markets analyst Jacob Bout, who
resumed coverage after a “pro-
longed” period of restriction with
an “outperformer – speculative”
rating. He says headline risks re-
main for the Montreal-based
firm, but sees it trading at close to
“concession-only value.”
Target:He dropped his target for
SNC shares to $25 from $49. The
current consensus on the Street is
$30.50.
Citing company and sector earn-
ings risk, Barclays analyst James
Rowland Clark downgradedStars
Group Inc. to “underweight”
from “equal-weight.” Mr. Clark,
whose earnings per share esti-
mates for 2020 trail the consensus
by 9 per cent, said there’s risk to
the company’s poker segment in
the third quarter, although he did
say wagering has momentum.
Target:He lowered his target to a
Street-low US$14.30 from
US$20.70. The consensus is
US$21.36.Major Drilling Group Interna-
tional Inc.’svaluation is “too
cheap [to] ignore amid improv-
ing fundamentals,” said Beacon
Securities analyst Ahmad Shaath,
leading him to raise his rating to
“buy” from “hold” after the re-
lease of first-quarter 2020 results
that exceeded the Street’s expec-
tations. “We believe the current
valuation is simply too attrac-
tive,” he said.
Target:Mr. Shaath increased his
target to $7.50 from $5.75. Con-
sensus is $6.50.H2O Innovation Inc.’sstrategy of
operating three complementary
segments focused on serving wa-
ter utilities “appears to be paying
dividends,” according to Acumen
Capital analyst Nick Corcoran,
who initiated coverage with a
“buy” rating. “We believe that as
HEO grows in scale through orga-
nic growth and acquisitions that
it will trade in line with the re-
gional (North American) peer
group,” he said.
Target:His target is $2. Consen-
sus is $1.90.Credit Suisse analyst Manav Gup-
ta says the criticism thatCana-
dian Natural Resources Inc.has
faced after the $3.8-billion acqui-
sition ofDevon Energy Corp.’s
Alberta assets is “unfair.” “We see
Jackfish adding materially to free-
cash-flow upside and pushing
FCF yield over 15 per cent (best in
class),” he said.
Target:Mr. Gupta maintained an
“outperform” rating and $48 tar-
get. Consensus is $45.32.| REPORTONBUSINESSW
hen Ashton Paul was
looking for a larger
home to settle down, he
turned to his parents for help.
Mr. Paul, 35, had already pro-
ven he could handle the expens-
es that come with home owner-
ship. In 2009, he gave his parents
$70,000 toward a condo they
bought for him as an investment
property near the Rogers Centre
in downtown Toronto. Mr. Paul
covered the expenses, including
the mortgage, condo fees and in-
surance, until deciding it was
time to buy a home for himself
in a more family-friendly neigh-
bourhood.
Last year, Mr. Paul and his par-
ents co-signed the mortgage on a
four-bedroom $800,000 house in
Markham, Ont., where he now
lives. His plan, once he “saves up
a bit more,” is to renovate the
basement and rent it out to help
with some of the expenses. In
the meantime, he continues to
rent out the Toronto condo for
$1,300 a month and sends the
money to his parents.
“Every month, I forward the
payments to my parents to cover
the mortgage and insurance,” he
says.
Mr. Paul is grateful for his par-
ents’ help getting him into the
real estate market and how the
arrangements were handled.
“There was no contract in-
volved – it was based on trust,”
says Mr. Paul, who is a govern-
ment transit employee. “They
know I am ambitious, and they
taught me to manage money
wisely.”
Many parents today believe
the only way their children will
own a home is if they buy it for
them or at least co-own the
property. For most parents, the
goal is to purchase the property
and then have the children cover
the costs – everything from in-
surance and taxes to repairs.
Monique Johnson, a Toronto-
based realtor with Keller Wil-
liams Portfolio Realty Brokerage,
has seen a significant increase in
the number of parents buying
homes for their children. In most
cases, the child can’t raise
enough money upfront, especial-
ly in expensive cities such as To-
ronto and Vancouver.
“I’m finding that a lot of mil-
lennials have the income, but
not the down payment,” Ms.
Johnson says.But before considering buying
their adult children a home, Ms.
Johnson says parents need to
trust the children have the bud-
geting skills and income to han-
dle the costs.
Adult children should also be
involved in the buying process,
from start to finish, to under-
stand the asset. That includes ev-
erything from choosing what
kind of property they want and
can sustain financially, and in
what area.
Ms. Johnson has seen situa-
tions in which parents purchase
homes in neighbourhoods their
children find undesirable and
then later sell it.
“It’s a big problem if a child
doesn’t want a certain home,”
Ms. Johnson says. “[Parents]
have to ensure that [their chil-
dren] have skin in the game –
and a say in the process.”
If the parents are taking out a
mortgage out to purchase the
home, the children should also
be involved in the agreement,says Scott Evans, an adviser at
BlueShore Financial in Vancouv-
er.
“I like the process of kids ap-
proaching the lender, finding out
how much they can afford before
approaching the bank of mom
and dad,” Mr. Evans says.
If parents want to retain con-
trol of the property, Mr. Evans
recommends they put their
name on the title, especially if
they plan to sell it down the
road.
Parents also need to take steps
to protect their investment if the
child is married and gets di-
vorced, or if they want to sell the
property.
“There are several ways a par-
ent can protect the monies pro-
vided to a child for the purchase
of a home, including taking back
a mortgage that might later be
forgiven and various trust ar-
rangements,” says Janet Sim, a
partner in the trusts and estates
group at WeirFoulds LLP in To-
ronto. Ms. Sim recommends con-
sulting a lawyer knowledgeable
in estate-planning matters to dis-
cuss the different options.
Ms. Johnson says the contracts
can protect the parents’ invest-
ment by stating that, if the home
is sold, they will receive their
down payment back, with 5-per-
cent interest, for example.
“Make it a business partner-
ship rather than a handout,” Ms.
Johnson says.
Failing to involve children in
home-buying – and the respon-
sibilities of home ownership –
can lead to children underappre-
ciating the value of what they
been given.
“They don’t realize the value
of what they’re receiving,” Ms.
Johnson says.
Mr. Paul says his parents
would have been reluctant to
support his home-ownership
dreams had he not shown finan-
cial savvy, including his ability to
save for the initial condo pur-
chase. His long-term goal is to
own multiple investment prop-
erties.
“They saw what I was trying to
accomplish,” Mr. Paul says.Special to The Globe and MailRealtorMoniqueJohnsonsaysmanymillennials‘havetheincome,butnotthedownpayment’forahome,
especiallyinahigh-pricedcitysuchasVancouver,picturedabove.DARRYLDYCK/THEGLOBEANDMAIL
Howtobuyahome
foryouradultchildren
Expensivemarket
hassomebuyers
turningtothe
‘bankofmomanddad’
ANNASHARRATT
OPINIONAdultchildrenshould
alsobeinvolvedin
thebuyingprocess,
fromstarttofinish,
tounderstandtheasset.
Thatincludeseverything
fromchoosing
whatkindofproperty
theywantandcan
sustainfinancially,
andinwhatarea.CANADIANSTOCKS
Canada’s main stock index inched higher on gains by key
commodities sectors despite a dip in crude and gold prices
and a sell-off in technology stocks.
The S&P/TSX Composite Index closed up 42.25 points at
16,537.34.
Suncor Energy Inc. says it will spend $1.4-billion to replace
its coke-fired boilers with two co-generation units at its oil
sands base plant north of Fort McMurray, Alta. Suncor says re-
placing the coke-fired boilers with co-generation will reduce
greenhouse gas emissions associated with steam production
at the base plant by approximately 25 per cent. The project is
expected to be in-service in the second half of 2023. The stock
gained 2.2 per cent.U.S.STOCKS
The S&P 500 ended little changed, with a rally in energy and
industrial shares countering a drop in the technology and real
estate sectors as investors favoured value over growth.
Industrials pulled the blue-chip Dow slightly higher and
led the bellwether S&P 500’s nominal advance, while the
tech-heavy Nasdaq posted its third straight decline. The Dow
Jones Industrial Average rose 0.28 per cent, the S&P 500
gained 0.03 per cent and the Nasdaq Composite dropped 0.
per cent.
Apple Inc. edged up 1.2 per cent after announcing the Nov. 1
launch date for its streaming service Apple TV+, and unveiled
its latest iPhone and Watch updates.COMMODITIES
Oil prices edged lower after U.S. President Donald Trump fired
national security adviser John Bolton, the chief architect of
Mr. Trump’s strident position against Iran, raising specula-
tion of a return of Iranian crude exports to the market.FOREXANDBONDS
The Canadian dollar strengthened to a near six-week high
against the U.S. dollar, supported by improvement in risk ap-
petite and a less dovish Bank of Canada policy announcement
last week than some investors had expected.
The U.S. dollar was steady against the euro, holding in its
recent tight range, before the European Central Bank on
Thursday is expected to cut interest rates deeper into negative
territory and possibly restart asset purchases.
Canadiangovernment bond prices were lower across the
yield curve in sympathy with U.S. Treasuries and German
Bunds. The 10-year yield touched its highest intraday level
since Aug. 1 at 1.435 per cent.
U.S. Treasury yields climbed to four-week peaks, tracking
German bonds, as risk appetite continued to improve with di-
minishing U.S.-China trade tensions and expectations of fis-
cal stimulus measures from Germany, Europe’s largest econo-
my.REUTERS,THECANADIANPRESSMarketssummary
M
arks & Spencer Group PLC’sexit from the FTSE
100 underlines how times have changed since the
blue-chip index was launched in 1984, when it was
dominated by British companies including
household names such as M&S, Cadbury and House of Fraser.
Home-grown talent is increasingly absent from the FTSE,
now valued at US$2.4-trillion, as failure to grow domestically
or make the cut internationally has seen companies disap-
pear in mergers, demotions, de-listing or privatization.
MFI Furniture was among founding members of the index
that failed to survive after privately owned IKEA entered the
British market in the 1980s.
British Home Stores and Magnet & Southerns were other
big retail names that have either failed or been bought by
other companies. These household brands have been giving
way to big corporations that make the bulk of their revenues
outside Britain. The most recent FTSE constituents pocket
just 29 per cent of their revenue from Britain.
M&S, which was the fifth-most-valuable company at the
FTSE’s inception, now ranks just 111th by market capitaliza-
tion – too small to qualify.
M&S shares have lost about 40 per cent of their value since
January, 2018, as the British high street stalwart has struggled
with competition in clothing and food, particularly online.
Other famous names at the risk of falling through the trap
doors soon are Morrison Supermarkets, Sainsbury’s and
B&Q-owner Kingfisher, now sitting at the bottom-end of the
index.
Until recently, M&S, Sainsbury’s and Tesco were some of
the 28 original members still in the FTSE.REUTERSMarks&Spencer’sFTSEexit
highlightswoesinU.K.retail
THYAGARAJUADINARAYANLONDON