SATURDAY, MAY 16, 2026 | THE GLOBE AND MAIL G B13 REPORT ON BUSINESS | In analyst reports, when are target prices predicted to be reached? How should I read tar- gets that are very close to the current stock price? And how do I interpret relative ratings? U nless an analyst explicitly says otherwise, you can as- sume that price targets are for 12 months from the date of the analysis. There’s some dis- agreement over how closely you should follow them, however. In a 2014 paper in the Journal of Business Finance & Account- ing, academics Zhi Da, Keejae P. Hong and Sangwoo Lee said that while the literature “generally agrees that analysts’ target prices are informative, the evidence on their ability to accurately forecast target prices is mixed at best.” In other words, price targets can help investors determine whether a stock is cheap or ex- pensive, and by roughly how much (a target-price-based trad- ing strategy outperformed the market during the paper’s sam- ple period). But don’t put too much weight on any exact num- ber. If an analyst gives a target very close to the current share price, they’re saying the company is more or less fairly valued. That doesn’t necessarily mean shares will trade flat over the next 12 months – a price target doesn’t make day-to-day predictions – but it suggests there isn’t much room for them to rise. Relative terms such as “out- perform” are also indicators of direction, but it’s important to understand what they are rela- tive to. You’ll often see the slight- ly clearer term “sector outper- form,” which suggests the stock will do better than the average of its peers covered by the analyst over the next 12 months. Some- times the research report or an institution’s rating criteria will indicate that the comparison is against a market index. Be careful not to confuse “out- perform” with “buy.” If an ana- lyst expects a sector to suffer over the next 12 months, an indi- vidual stock may still “outper- form” by falling less than its peers. I am in my early 60s and still working, with a large RRSP, a good-sized LIRA and contribution room in my TFSA. I expect near maximum CPP and OAS pay- ments. Does it make sense for me to move money from my RRSP to my TFSA? The prospect of getting tax-free growth inside the TFSA and tax-free withdrawals later when I’m getting CPP and OAS makes the idea appealing, even if I’m taxed now. In general this is probably not a good idea, especially if you’re considering moving a big chunk all at once, said Anita Bruinsma, an advice-only planner and foun- der of Clarity Personal Finance in Toronto. Since you’re still work- ing, taking a large sum out of your RRSP could easily bump you into a much higher tax bracket. Ms. Bruinsma said it’s still good to ensure you have money in your TFSA to complement your RRSP. This could mean stopping contributions to your RRSP and directing more savings to your TFSA instead. Whether that makes sense depends on your circumstances. “The most important thing is your tax bracket today versus your tax bracket in the future,” she said. Consider the size of your RRSP and all your future sources of in- come. If you have a smaller RRSP, required minimum with- drawals will also be small and may not push you to the level of Old Age Security clawbacks. If your RRSP is on the larger side, you may find that minimum withdrawals provide you with more income than you need, which can be an opportunity to contribute to your TFSA, Ms. Bruinsma said. You mentioned your LIRA (locked-in retirement account) as well as your Canada Pension Plan and OAS payments, but think about timing. “When are you going to take CPP and OAS? Because, of course, when you delay till 70, that is a much bigger payment, so that can have more of an impact on questions around your tax brack- et and your OAS clawback,” Ms. Bruinsma said. You’ll also want to look at what income-splitting options are available if you’re married or in a common-law relationship. You are on the right track to be thinking about how to best use your TFSA. Having money in these accounts offers retirees flexibility in managing cash flow, as you can take less out of your RRSP to keep your income in a certain tax bracket. Money in a TFSA is also useful for “big chun- ky expenses,” Ms. Bruinsma said: No one wants a new car to come with a higher tax bracket and OAS clawbacks that would come with a big RRSP withdrawal to pay for it. It’s always useful to take the time to consider what approach works best within the structure of your own specific retirement plan, which you can create on your own or with the help of an adviser or planner. E-mail your questions to agalbraith@globeandmail.com. I’m not able to respond personally to e-mails but I choose certain questions to answer in my column. Understanding analyst price targets, and how to balance RRSPs and TFSAs Price targets can help investors determine whether a stock is cheap or expensive, and by roughly how much ANDREW GALBRAITH OPINION S ome investors are looking away from the U.S. to find growth, but money manager Mike Archibald remains bullish on the world’s largest economy, especially after the most recent earnings season. “We saw an incredible first quarter of earnings being report- ed. It’s hard to foresee an environ- ment in which stocks don’t do well when earnings are growing as aggressively as they are right now,” says Mr. Archibald, vice- president and portfolio manager at AGF Investments Inc. in Toron- to. He points to data from FactSet showing that more than 80 per cent of companies on the S&P 500 beat first-quarter revenue and earnings-per-share (EPS) expec- tations, with the growth spread across various sectors. Although there are market risks, including the front-and- centre conflict in the Middle East, Mr. Archibald says fiscal and monetary stimulus will continue to drive broader business and consumer spending in the U.S. “Our view is that the U.S. is a very good place to be – and we still see higher stock prices over the next six to 12 months,” says Mr. Archibald, who helps oversee about $23-billion in assets across five funds. Still, he says not all sectors will outperform. Mr. Archibald, who co-manages the $12-billion AGF American Growth Class alongside Auritro Kundu, sees the most po- tential in information technology and industrial stocks, especially companies benefiting from spending on artificial intelli- gence. He’s cautious on defensive sectors such as health care and consumer discretionary. AGF American Growth Class, Series F – with its top five hold- ings Nvidia Corp., Alphabet Inc., Amazon.com Inc., Corning Inc. and Applied Materials Inc. – has returned 14.3 per cent so far this year. Its one-year return is 33 per cent while its three- and five-year annualized returns are 28 per cent and 17.4 per cent, respective- ly. The performance is based on total returns, net of fees, as of May 8. The Globe spoke with Mr. Ar- chibald about three stocks he bought recently – all of which are tied to AI – and a sell in the health care sector: Let’s start with the three buys. What are they? Caterpillar Inc., the U.S.-based global leader in heavy equipment and power systems, is a stock we started buying in January and added throughout the first quar- ter. Our average price was US$661 a share. Caterpillar gives us access to the traditional heavy industrial segments of the market, such as construction, mining and energy, which are all growing as com- modity prices remain elevated and U.S. re-shoring and manufac- turing activity pick up. It has also successfully reposi- tioned itself as a critical infras- tructure provider for the digital age. The massive build-out of da- ta centres and the need for large- scale, reliable power have been major drivers of Caterpillar’s power and energy segment. Reve- nue and earnings should grow above trend for the next three years. GE Vernova Inc., a global lead- er in the energy transition, is a stock we bought in March this year at an average price of US$885 a share. GE Vernova operates in three key segments: power, electrifica- tion and wind. It operates directly in the buildout of data centres by providing gas turbines and grid equipment for the massive num- ber of AI data facilities being con- structed in the U.S. and globally. The super-cycle of demand for AI data centres makes it a key ‘picks and shovels’ power player for the industry, with a massive backlog, improving margins and visibility out for several years. As demand and pricing power for its products continue to im- prove, GE Vernova has consistent- ly beaten and raised guidance ex- pectations, and we expect the company to generate significant- ly more free cash flow in the fu- ture, pointing to higher capital re- turns for shareholders in 2026 and beyond. Corning Inc., a key electronic equipment and instruments player in the AI build-out theme, is a stock we bought in December last year at an average price of US$95 a share. Corning provides fibre-optic cables and connectors to enable high-speed data transmission over longer distances with lower power requirements. With in- creasing data needs for AI queries, faster, more reliable bandwidth is required, which tra- ditional copper can’t provide. Corning recently signed an agree- ment with Nvidia to be a key sup- plier, boosting its production ca- pacity by more than 50 per cent. Corning is well-positioned as a key AI infrastructure scaling part- ner, which should help drive its growth in the coming years. We expect further partnership an- nouncements, which should lead to sustained 30-per-cent earnings per share (EPS) growth rates for the next three years. Name a stock you sold recently. Boston Scientific Corp., the med- ical device company, is a stock we started selling in December last year and exited the position in the first quarter of this year. We owned the company for more than two years, buying it at an av- erage cost of US$49 a share and selling it for an average cost of US$89. We decided to sell it as part of our move away from health care and because of the company’s slower growth profile over the next few years. Boston Scientific has gone from an average annual EPS growth rate of about 22 per cent from 2023 to 2025 down to projec- tions of around 12 per cent from 2025 to 2028. That turned out to be a good call because the stock has contin- ued to weaken throughout the second quarter. Special to The Globe and Mail This interview has been edited and condensed. Why this money manager is buying Caterpillar, selling Boston Scientific BRENDA BOUW ILLUSTRATION BY JOEL KIMMEL Mr. Archibald sees the most potential in information technology and industrial stocks, especially companies benefiting from spending on artificial intelligence. B arbara Reid, a Toronto resi- dent who lives in one of the city’s oldest rental towers dating back to the 1960s, has a warning for fellow tenants: Just because you live in a rent-con- trolled building doesn’t mean you won’t face surprise rent in- creases. That’s what happened to Ms. Reid. Her corporate landlord has requested a 9-per-cent rent hike spread out over three years. That’s on top of regular inflation- adjusted rent increases of up to 2.5 per cent per year that Ontario allows for rent-controlled build- ings. The extra 3 per cent per year that Ms. Reid’s landlord would like to charge is known as an above-guideline increase (AGI) and is meant to cover capital ex- penses such as upgrades and ma- jor repairs. Landlords must sub- mit those proposed rent increas- es for review by the province’s landlord and tenant board once they’ve completed the work. One of the issues with above- guideline increases is that they’ve become increasingly common in Ontario over the past 15 years or so. The number of landlord applications for ex- traordinary rent hikes has in- creased from fewer than 300 a fiscal year in 2009-2010 to more than 1,000 in 2024-2025, accord- ing to government data. “Do we really have rent con- trol in this province when we al- low these above guideline in- creases?” Ms. Reid asked during a phone interview a few weeks ago. At least some corporate land- lords have come to see above- guideline increases as an invest- ment strategy. In a recent report, researchers at the think tank Canadian Cen- tre for Policy Alternatives quoted one real estate investment trust, or REIT, listing those rent hikes under “revenue opportunities.” This isn’t just an Ontario prob- lem. Tenant groups in B.C. have flagged similar concerns. And other provinces with rent-con- trol regulations, particularly Ma- nitoba and New Brunswick, have similar mechanisms for extraor- dinary rent hikes tied to capital expenditures. I asked Toronto tenant advo- cate Alex Venuto what renters should know about above-guide- line increases. Mr. Venuto is co-chair of the Ontario Renters For Fair Housing Coalition, a group that brings to- gether tenant associations across the province. He said tenants should take the time to comb through their landlord’s applications for above-guideline rent hikes. Bur- ied in the documents – which can be more than 1,000 pages for large rental complexes – can be dubious charges. For example, Mr. Venuto said he’s seen landlords try to raise rents to cover costs that included expenses related to commercial assets in mixed-use rental build- ings (think: stores or restaurants on the ground floor, for exam- ple). It’s also important to know that above-guideline rent in- crease requests can be negotiat- ed, Mr. Venuto said. Also good to note: Ontario landlords can start charging for an above-guideline increase be- fore they’ve been cleared by the landlord-tenant board, but ten- ants don’t have an obligation to pay until the rent hike has been approved. For residents who don’t want to pay until it’s official, Mr. Ven- uto suggests setting aside the equivalent of the monthly in- crease in a high-interest savings accounts. Board decisions on rent in- creases can take more than two years, which means renters could earn “a nice chunk of money” on interest, he said. Despite ever more frequent above-guideline increases, Mr. Venuto was unequivocal about rent-control buildings being the superior option for long-term tenants. This holds even now that market rents are falling sharply, he said. Over time, he said, regulated rents will still be lower. “It’s still better to live in a rent-controlled building at the end of the day.” Attention tenants: Rent control won’t always protect you from surprise increases ERICA ALINI PERSONAL ECONOMICS REPORTER In Ontario, the number of landlord applications for extraordinary rent hikes has increased from fewer than 300 a fiscal year in 2009-2010 to more than 1,000 in 2024-2025, according to government data. SAMMY KOGAN/ THE GLOBE AND MAIL