6 Stocks to own in Canada
Post on: 24 Август, 2015 No Comment
Barclays has unveiled its 140 top picks for equity investors in 2014, with 58 coming from the Americas but only six of them are listed on the TSX.
Goldcorp Inc. Suncor Energy Inc. Enerplus Corp. Manulife Financial Corp. Canadian Tire Corp. Ltd. and Quebecor Inc. made the cut as Canadian favourites among the investment banks analysts.
Goldcorp, which was listed along with other basic industries companies such as Freeport McMoRan Copper & Gold Inc. and CF Industries Holdings Inc. is rated overweight with a US$34 price target. That implies potential upside of more than 60%.
Goldcorp is the most compelling growth story in our coverage universe as the company’s development projects are well into the construction phase, with all of its current growth projects expected to commence first gold production within the next 18 months, analyst Farooq Hamed wrote.
He estimates gold production growth of 33% by the end of 2015 for Goldcorp, adding that spending should fall by 21%, or US$500-million, in 2014 since 2013 has been the miners largest capex year.
Suncor, one of two Canadian energy names highlighted, is rated overweight with a $48 price target, implying upside of approximately 30%.
Analyst Paul Cheng thinks the stock offers one of the best risk/reward profiles among large-cap oil majors, pointing to the companys expected 6% to 8% annual production growth for the next 10 to 15 years. He also highlighted Suncors positive free cash flow generation after capex and its dividend with oil prices below US$100 per barrel.
Enerplus, another one of Barclays seven energy picks, is rated overweight with a $23 price target, implying upside of roughly 15%.
Grant Hofer praised the companys attractive growth profile, conservative guidance and well-funded 5.5% dividend yield.
The company’s growth is driven by its North Dakota Bakken and Pennsylvania Marcellus assets, along with an emerging liquids-rich portfolio in Canada, the analyst said. Today, Enerplus ranks among the best in the sector on most financial and operating metrics, but continues to trade near the lower end of the peer group as its cash flow growth kept pace with share price performance year-to-date in 2013.
Manulife joins J.P. Morgan Chase & Co. Simon Property Group Inc. Nasdaq OMX Group Inc. and 15 other financial services companies on the list.
Analyst John Aiken, who rates the Canadian lifeco at overweight with a $23 price target, highlighted its sensitivity to a strengthening global economy and contributions from growing operations in Asia.
Manulife’s earnings have the most upside of its peers in a rising interest rate and equity market environment, and, with the actions undertaken, we believe that it has strongly positioned itself to benefit from the primary and secondary impacts of a stronger global economy, he said.
Canadian Tire Corp. was selected along with U.S. retailers such as Best Buy Co. Inc. and Gap Inc. due to several potential upside drivers in the next 12 to 24 months.
Analyst Jim Durran pointed to the iconic Canadian retailers partial sale of square footage into its CT REIT subsidiary, increased share buybacks, and a higher valuation multiple when consumer spending improves.
Quebecor joins American Tower Corp. as the only telecommunications companies on Barclays list.
We believe Quebecor’s strong competitive position will further strengthen over the next several years with its growing wireless business; we also believe the market is underestimating the value of the wireless business, analyst Phillip Huang said. In addition, Quebecor is practically immune to the potential new regulations given its position as a new wireless competitor and its already flexible TV pricing plans.