What are we looking for?
Stocks positioned well for a low-loonie era.
The recent plunge in oil prices has been fully reflected in the value of the Canadian dollar, which last month fell to its lowest level against the U.S. dollar since 2009.
As a currency linked to commodity prices, the oil selloff dragged down the value of the loonie to a recent low of $87.21 (U.S.) from $94.15 in July. The Canadian currency traded in excess of par as recently as February of last year.
OPEC's decision last week not to cut production amid an oversupplied global oil market, combined with recent headline strength in the U.S. economy, have combined to keep the Canadian dollar subdued.
In October, National Bank Financial put together a list of Canadian stocks poised to be the "big winners of a declining Canadian dollar environment."
"We think the greenback has considerable upside," the bank said. "It will become harder for the loonie to resist the headwinds generated by the U.S. dollar's ascent."
How did we do it?
We took the National Bank list of potential winners and included some metrics, as well as information on recent stock performance.
We looked at the movement in share price both year-to-date, and since the report was produced on Oct. 8.
And we provided forward price-to-earnings ratios and dividend yields for each stock.
What did we find?
The list is composed of 21 stocks spanning several sectors, but with most having in common significant interests south of the border.
Most stocks on National Bank's list generate a large portion of their revenues from the U.S. market. Revenue denominated in U.S. dollars gets a boost when converted on financial statements by companies reporting in Canadian currency.
All else being equal, these companies should benefit when the U.S. dollar strengthens against the loonie.
Investors should be aware that several of these stocks have made big moves in the almost two months since the report was produced. And they should conduct their own research before making any investment decisions.
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