This TSX stock fought its way back from the AI software rout and may have ‘strong growth prospects’

The Week in Stocks: Why now is not the time to buy the dips, how 11 major projects could help Canada's freight stocks and moreYou can save this article by registering for free here. Or sign-in if you have an account.Why now is not the time to buy the dips from the war in Iran, how projects of national interest could help Canada’s freight stocks and more from The Week in Stocks.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.Thomson Reuters Corp. (TRI:TSX) added this week to its nearly 35 per cent rebound from early February, more than gaining back the losses it suffered when it got caught in the recent artificial intelligence-related software rout. TD Cowen analysts led by Vince Valentini reconfirmed the company as a top pick and had a price target of $175 in a March 3 note based on the results of a survey of 100 U.S.-based law firms to assess their use of generative AI services. Shares closed Friday at $151.44. Thomson Reuters got swept up in a software stock selloff after AI company Anthropic released a set of tools markets believed would erode the business of legal software and publishing companies. However, based on the survey results, TD thinks Toronto-based Thomson Reuters can benefit more from AI than be hurt by it and that “new AI players are not disrupting its legal service.” TD said, “We believe the selloff in Thomson Reuters is overdone,” adding, “We believe TRI displays many attributes … to maintain a sustainable moat and strong growth prospects.” The 12-month consensus price target of $177.97 is based on 17 analysts, according to Bloomberg.Canada's best source for investing news, analysis and insight.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Investor will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.The price of West Texas Intermediate, the North American crude oil benchmark, is up more than 22 per cent since the war in Iran started, positioning rising energy prices as the top risk. “As is usually the case in military conflicts, as we saw early on after Russia waged war on Ukraine, it comes down to energy prices in terms of the shock waves to all corners of the financial markets,” David Rosenberg, president of Rosenberg Research & Associates Inc., said in a note. And those “shock waves” are being felt. Liquefied natural gas (LNG) prices in Europe soared 50 per cent after Qatar was forced to shutter its LNG plant, while the Strait of Hormuz, a critical “chokepoint” for oil transportation, is essentially closed. Further, investors seeking safety are flocking to the U.S. dollar, boosting its value and making it tougher for the economy and the “risk-on” — or higher tolerance for risk — trade. “For the global economy and capital markets, the timeline here cannot last much longer than the four weeks that has been bandied about by the (U.S.) administration,” Rosenberg said. However, investors who are thinking of buying the dips with the S&P/TSX composite index and the S&P 500 index down two per cent and just under one per cent this week, respectively, could get be getting ahead of themselves. Rosenberg said the VIX — the volatility or fear index index — needs to rise to 50 to signal “capitulation.” It’s currently sitting at around 24. “This typically is the most ideal time to start putting cash to work … unless this war with Iran is resolved first,” Rosenberg said.There could be a light at the end of the tunnel for Canada’s freight carriers, which have suffered through four years of recession-like conditions due to sluggish volumes, according to CIBC Capital Markets. Analysts led by Kevin Chiang think freight volumes can ride the “tailwind” that will be created by Canada’s 11 projects of national interest. They assume $84 billion will be spent on the major projects over a 10-year period starting from 2025 that could lift freight volumes by 1.8 per cent year over year. CIBC covers four companies in Canada’s freight space — Canadian National Railway Co. (CN:TSX), Canadian Pacific Kansas City Ltd. (CP:TSX), Mullen Group Ltd. (MTL:TSX) and TFI International Inc. (TFII:TSX). CN and Mullen Group are their top picks because they say these are situated to benefit the most from the group of projects. For example, CN operates in many of the areas where projects will be built including the North Coast transmission line and the Ksi Lisims LNG project in British Columbia, Canada Nickel’s Crawford Project in Ontario, and Nouveau Monde’s Matawinie Mine in Quebec.

For Mullen Group, CIBC thinks its strong western presence sets it up to benefit from the Red Chris Mine and LNG Canada phase II, both in B.C., the McIlvenna Bay Copper Mine in Saskatchewan, and the other B.C. projects. “We would also make the case that these infrastructure projects are not being priced into Canadian freight equities today,” they said. Editor’s note: The Keeping Score charts will return in next week’s The Week in Stocks column. Every week, the Financial Post breaks down the most interesting developments in the week’s world of investing, from top performers to surprising analyst calls and stocks to have on your radar.Are you an investor looking for stock ideas and market insight? Sign up for the weekly FP Investor Newsletter here to get the best of the Financial Post’s investing news, analysis and expert commentary straight to your inbox.• Email: gmvsuhanic@postmedia.com Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.