Canadian Outlook 2009
STRATEGY
Outlook for Opportunity
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Canadian Outlook 2009: Our most recent edition of the Canadian Outlook
provides a thorough sector analysis of the potential investment landscape as
we move beyond the current credit crisis. Our report contains commentary
from all of the Canadian-based analysts and many of the analysts across the
globe that cover Canadian-incorporated companies. Finally, our colleagues
around the globe have issued a number of outlook reports that should be
referenced, including: “Global equity strategy – 2009 Outlook: Sectors and
themes”; “Life Beyond the Credit Crisis” (US); “Asia Market Strategy: 2009
Outlook”; and, “Guide to 2009: Beyond the credit crisis” (Europe).
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Top defensive picks: In the current market conditions, our top defensive
names include: Albany International; Brookfield Infrastructure Partners LP;
Cameco; Emera; Goldcorp; Monsanto; Nokia; Packaging Corp. of America;
Rogers; Shoppers Drug Mart; Tim Hortons; and, Westlake.
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Best upside over 12-24 months: Beyond our typical 12-month target price
time horizon, a number of companies offer the best upside, including: Albany
International; Alcatel-Lucent; Agnico-Eagle; Brookfield Asset Management;
HudBay Minerals; Manulife; Mosaic; Rogers; Rona; Shaw; Sino-Forest;
Suncor; TransAlta; and, Viterra.
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Most vulnerable: Generally, the current market conditions do not favour
companies with funding gaps, refinancing risks or undue exposure to the
consumer. Some vulnerable stocks include: Bank of Montreal; Cabela’s;
Canadian Tire; CanWest; Enbridge; Ericsson; George Weston; Golden Star;
Nova Chemical; Talbot’s; Teck Cominco; and, TimberWest Forest.
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Balancing offense and defense: We believe the Canadian capital markets
provide a delicate balance of solid defensive footing and opportunities for
future upside. The defensive positioning can be attributed to a combination
of dominant domestic business models, a relatively healthy financial system,
regulatory regimes and several truly globally unique investment opportunities.
Given the existing valuations in a number of sectors (especially commodity
related areas), we believe the Canadian capital markets look well positioned
to take advantage of several longer-term trends that may provide excess
returns in the future.

Table of contents
Executive summary 3
Canadian economics 2009 outlook 6
FX Strategy: A 2009 recovery? 7
Basic Materials 8
Ag Science 9
Commodity Chemicals 11
Paper & Forest Products 12
Specialty Softlines 15
Consumer Staples/Discretionary 17
Canadian Retail 17
Consumer Staples 21
Consumer Discretionary 22
Oil & Gas, Canada 23
Canadian Oil & Gas Market Outlook 23
Takeover speculation resurfaces 23
Top Picks for 2009 – EnCana & Suncor 26
EnCana – Outperform (TP: US$63) 26
Suncor – Outperform (TP: C$46) 27
Infrastructure 28
Access to capital 28
Access to debt capital 28
Stimulus impact 30
Future capital allocation 31
Oil sands infrastructure 31
Natural gas infrastructure 32
Cross-border M&A potential 33
Stock themes 34
Diversified Financial Services 36
Canadian Financial Services 37
Valuation: 37
Impact of the Credit Crisis: 37
Government Stimulus: 38
Strategic M&A: 39
Changes in Industry Structure: 39
Most Defensive Name: 40
Most Vulnerable: 40
Best Upside: 40
Metals & Mining 41
Overview 41
Company highlights 41
Precious Metals 43
Overview 43
Company Highlights 43
Timberlands, Canada 45
Telecom and Media 50
Equity Risk Premium 51
Liquidity Pressures 52
Industry Structures 52
Stock Picks 53
Telecom Equipment 54
Summary 54
Cyclical issues 54
The bar-bell 58