Strategists at RBC Dominion Securities Inc. added two new names, GFL Environmental Inc. and National Bank of Canada, to their Canadian Focus List on Thursday, while The Bank of Nova Scotia was removed from the list.

The bank’s Focus List is comprised of at least 20 stocks from a variety of sectors that RBC strategists consider to be high quality and have a solid track record of creating shareholder value. 

RBC Analyst Walter Spracklin said he viewed GFL as a well-positioned stock in a defensive sector.

“As the fourth-largest environmental services company in North America, GFL boasts a broad network of vertically integrated assets and infrastructure strategically located throughout the U.S. and Canada,” Spracklin said in a report.

He also argued that the waste sector in general is considered a “more defensive cyclical, with strong earnings predictability (and) cash flow sustainability.”

He has a 12-month target price of US$28.00 on GFL shares and a sector outperform recommendation (the equivalent of a buy).

However, he warned of potential headwinds including the integration of acquired firms, higher fees from third-party landfills and disposal facilities, and its debt.

The company holds debt at variable rates, making it sensitive to the rising interest rate environment, he noted. Should it struggle to service its debt oblations, it may need to “refinance debt or dispose of assets, reduce or delay capex or issue equity to obtain more funding,” Spracklin said. 

Meanwhile, analyst Darko Mihelic said he expects National Bank’s credit loss provisions to improve in 2023, and said the bank has been progressing on cost reductions and efficiency improvements.

He sees earnings in the company's personal and commercial banking division increasing about 11 per cent this year and four per cent next year. 

He has a 12-month target price of $109 on National Bank shares and a sector perform recommendation (the equivalent of a hold). 

Mihelic noted possible risks to the bank include an economic downturn, especially in Quebec, and a sustained decline in capital markets activity.

RBC reported the overall performance for its summer Focus List was a loss of 2.24 per cent, which outperformed the S&P/TSX Composite Index’s 6.01 per cent decline over the same three-month span of May 31 to Aug. 31.