What are we looking for?
Today, we use analysts’ price targets to search out which Canadian stocks are expected to generate the highest returns over the next year.
Our friend Craig McGee, senior consultant at Morningstar Canada, provided today’s stock analysis, and its criteria are pretty straightforward.
Using Morningstar’s CPMS market database, he looked at analysts’ consensus 12-month price targets for S&P/TSX composite index constituents, and compared them with current prices to determine the percentage change in share price implied by those consensus targets. He then added in the stocks’ expected dividend yields, to get a forecast total return for the next 12 months. To come up with his final list of the top 20 expected total returns (in the accompanying table), he set a limit of no more than four stocks in any given sector, in order to have a more diversified list.
More about Morningstar
Morningstar Inc. provides independent investment research in North America, Europe, Australia and Asia. Its investment research tool, Morningstar CPMS, provides quantitative North American equity research and portfolio analysis to institutional clients and financial advisers. CPMS data cover more than 95 per cent of the investable North American stock market.
What we found
The top expected return for the year belongs to Rubicon Minerals Corp., a junior gold exploration company that is pursuing development of its Phoenix Gold Project in Red Lake, Ont. Analysts’ consensus targets imply a 130.9-per-cent price appreciation over the next year. (The company has no dividend.)
The 20 stocks on the list are forecast to generate an average total return of 52 per cent in the next year; the median return is a more modest 35 per cent. Either way, that suggests these 20 stocks would deliver a home run for investors.
But keep in mind that these are based only on analysts’ collective forecasts for where prices could go over the next 12 months; by no means is there any guarantee that those targets will be reached, or that the stocks would be at or above the consensus targets a year from now. (Even when analysts are right about their targets, stocks will often reach the target level well within the 12 months and then retreat on profit-taking.)
High hopes for big growth and (by extension) stock appreciation can often also come with significant risk and volatility. As always, you’ll want to conduct additional research into these stocks before making an investing decision.
S&P/TSX stocks expected to generate the highest returns over the next year
|Company||Symbol||$ Price (Jan. 18)||Consensus 12-month Target Price $|
|Rubicon Minerals Corp.||RMX-T||2.49||5.75|
|Premier Gold Mines Ltd.||PG-T||3.99||7.85|
|Colossus Minerals Inc.||CSI-T||4.64||8.87|
|Gabriel Resources Ltd.||GBU-T||2.82||5.00|
|Bankers Petroleum Ltd.||BNK-T||2.96||5.00|
|Crew Energy Inc.||CR-T||6.02||10.00|
|PetroBakken Energy Ltd.||PBN-T||9.05||13.75|
|Company||Symbol||$ Price (Jan. 18)||Consensus 12-month Target Price $||Expected Price Change||Expected Yield||Expected Total Return|
|Rubicon Minerals Corp.||RMX-T||2.49||5.75||130.9%||0.0%||130.9%|
|Premier Gold Mines Ltd.||PG-T||3.99||7.85||96.7%||0.0%||96.7%|
|Colossus Minerals Inc.||CSI-T||4.64||8.87||91.3%||0.0%||91.3%|
|Gabriel Resources Ltd.||GBU-T||2.82||5.00||77.3%||0.0%||77.3%|
|Bankers Petroleum Ltd.||BNK-T||2.96||5.00||68.9%||0.0%||68.9%|
|Crew Energy Inc.||CR-T||6.02||10.00||66.1%||0.0%||66.1%|
|PetroBakken Energy Ltd.||PBN-T||9.05||13.75||51.9%||10.6%||62.5%|
|Martinrea Int'l Inc.||MRE-T||8.55||11.13||30.1%||0.0%||30.1%|
|Aecon Group Inc.||ARE-T||11.83||15.00||26.8%||2.4%||29.2%|
|AGF Management Ltd.||AGF.B-T||9.74||11.50||18.1%||11.1%||29.2%|
|Chorus Aviation Inc., B||CHR.B-T||4.22||4.75||12.6%||14.2%||26.8%|
|Brookfield Off Prop||BPO-T||16.63||19.72||18.6%||3.3%||21.9%|