According to average estimates of economists surveyed by Bloomberg, Canadian equity markets are forecast to improve during 2014, performing at least in-line with the performance of U.S major indices, led by companies raising their dividends. According to Robert Gorman, chief portfolio strategist at Toronto-Dominion Bank, the Standard & Poor’s/TSX Composite Index (SPTSX) and its U.S. counterpart S&P 500 (SPX) index will provide return of about 7% each including dividends during 2014, as economies in the U.S., Europe and China grow. Dividend stocks are expected to rule on relative terms and the resources sectors are seen performing comparatively better after showing signs of bottoming out. So far this year, the S&P/TSX has underperformed the S&P 500 for a third straight year, gaining 7.1% in comparison to the S&P 500 which rallied 26% aided by the U.S. Federal Reserve’s $85 billion-a-month bond-buying program.
According to the International Monetary Fund (IMF), Canada's economy is estimated to accelerate next year as a pick-up in the U.S. recovery boosts exports. The IMF foresees Canada's economic growth at 2.25% during 2014 from an estimated 1.6% this year. Further, IMF reports that spending on machinery and equipment is expected to strengthen during 2014. Investments in energy sector are also seen expanding next year.
Ubika Research has shortlisted eleven Canadian stocks across sectors which appear to be undervalued and provide attractive dividend yields. These stocks are expected to register strong earnings growth during 2014. Moreover, these stocks are currently trading at low forward Price-to-Earning (P/E), Price to Book (P/B) and Price to Cash Flow (P/CF) multiples with relatively low PEG ratio and appear to be undervalued. Additionally, these stocks are expected to provide attractive dividends during 2014, based on consensus estimates of analysts polled by Bloomberg. We note these stocks have recorded gains during the past three month with average traded volume in excess of 100,000.
|
Company Name |
Exchange |
Ticker |
Sector |
Market Cap |
Last Price |
Average Volume |
Price Change |
EPS Growth (2014E) |
PE Ratio (2014E) |
P/B Ratio (2014E) |
P/CF Ratio (2014E) |
Dividend Yield (2014E) |
|
Whitecap Resources Inc |
TSX |
WCP |
Energy |
2,189.0 |
12.71 |
1,958,326 |
13.7% |
49.7% |
19.2 |
1.6 |
6.2 |
4.8% |
|
Savanna Energy Services Corp |
TSX |
SVY |
Energy |
688.4 |
7.85 |
230,684 |
3.3% |
37.4% |
13.5 |
0.7 |
4.3 |
4.6% |
|
Glacier Media Inc |
TSX |
GVC |
Communications |
124.9 |
1.40 |
146,096 |
4.5% |
33.3% |
11.7 |
0.4 |
3.2 |
4.3% |
|
CanElson Drilling Inc |
TSX |
CDI |
Energy |
554.6 |
6.23 |
321,749 |
4.4% |
31.4% |
9.8 |
1.3 |
5.2 |
3.7% |
|
Essential Energy Services Ltd |
TSX |
ESN |
Energy |
386.9 |
3.09 |
514,635 |
21.2% |
70.0% |
9.0 |
1.1 |
4.8 |
3.6% |
|
Cott Corp |
TSX |
BCB |
Beverages |
843.2 |
8.93 |
157,721 |
6.2% |
41.1% |
15.1 |
1.2 |
4.8 |
3.0% |
|
Newalta Corp |
TSX |
NAL |
Industrial |
887.7 |
16.09 |
137,017 |
3.1% |
29.2% |
14.8 |
1.3 |
5.5 |
2.7% |
|
Surge Energy Inc |
TSX |
SGY |
Energy |
1,056.0 |
6.76 |
3,041,533 |
11.6% |
670.8% |
18.3 |
1.5 |
5.2 |
2.6% |
|
Cascades Inc |
TSX |
CAS |
Basic Materials |
608.4 |
6.48 |
109,877 |
18.5% |
165.9% |
11.7 |
0.5 |
2.7 |
2.5% |
|
Aecon Group Inc |
TSX |
ARE |
Industrial |
833.1 |
14.90 |
344,182 |
13.3% |
60.4% |
11.0 |
1.5 |
6.2 |
2.1% |
|
Trinidad Drilling Ltd |
TSX |
TDG |
Energy |
1,173.6 |
9.71 |
918,620 |
1.6% |
37.8% |
13.2 |
1.2 |
4.9 |
2.1% |
Source: Bloomberg
Company Description:
Whitecap Resources Inc WCP
Whitecap Resources, Inc. explores for oil and natural gas. The company operates in western Canada.
Savanna Energy Services Corp SVY
Savanna Energy Services Corp. provides oil and gas service to Canada and parts of the United States. The company provides well servicing, proprietary coiled tubing drilling, and cased-hole wireline logging and perforating through its wholly-owned subsidiaries.
Glacier Media Inc GVC
Glacier Media Inc. is an information communications company that provides information through print, electronic, and online media. The company operates in the business and professional market and in the newspaper and trade publication market.
CanElson Drilling Inc CDI
CanElson Drilling, Inc. manufactures, acquires and operates drilling rigs for the oil and natural gas industry. The company operates in the western Canadian Sedimentary Basin, the Permian Basin of west Texas, and the Ebano-PanucoCacalilao fields of Mexico.
Essential Energy Services Ltd ESN
Essential Energy Services Limited provides essential oilfield services to oil and gas wells in Canada. The company's service rigs are used to repair, recomplete and stimulate existing oil and natural gas wells and perform completion work on new wells.
Cott Corp BCB
Cott Corporation produces and distributes a variety of premium beverages. The company's beverages include soft drinks, new age beverages, iced teas, juice drinks, sports drinks, and bottled water. Cott operates manufacturing facilities in Canada, the United States, the United Kingdom. The company markets its beverages to retailers worldwide.
Newalta Corp NAL
Newalta Corp. recycles and recovers saleable products from industrial wastes through a network of facilities. The company serves national and international corporations in the automotive, forestry, mining, transportation services, and other industries.
Surge Energy Inc SGY
Surge Energy, Inc. explores for oil and natural gas. The company operates in Alberta and Manitoba in Canada.
Cascades Inc CAS
Cascades Inc. produces paper and packaging products. The company manufactures, converts and markets specialty products, including boxboard, fine papers, tissue paper, and containerboard. Cascades and its subsidiaries operate in Canada, the United States, France, Sweden, Germany, and Great Britain.
Aecon Group Inc ARE
Aecon Group Inc. is a construction and infrastructure development company that provides services to private and public sector clients. The company conducts operations throughout Canada and internationally. Aecon provides services such as development and project financing, design and engineering, procurement and construction, and operation and facility management.
Trinidad Drilling Ltd TDG
Trinidad Drilling Ltd. offers drilling services to the oil and gas industry. The company owns land drilling and barge rigs.
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