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A Bay Street sign, a symbol of Canada's economic markets and where main financial institutions are located, is seen in Toronto, May 1, 2013.Mark Blinch/Reuters

Raymond James released its Canadian analysts' 2018 best picks list on Monday, comprised of 18 stocks meant to represent the firm's best ideas for the calendar year ahead.

Its annual list has delivered an average holding period return of 13.3 per cent over the past 10 years, outpacing the S&P/TSX Small Cap index by 4.5 per cent on the same basis, according to Daryl Swetlishoff, the firm's Head of Research (Canada).

"2017 proved to be another strong year for the Raymond James list, with 11 of the 14 names outperforming the S&P/TSX Small Cap Index return of negative 1.4 per cent for an overall 18.4-per-cent average holding period return from Dec. 12, 2016 to Dec. 7, 2017. Notable performances include StorageVault Canada, posting a 90.3-per-cent return, FirstService with a 48.0-per-cent return and Interfor Corp. with 34.3 per cent," he said.

The firm's picks for 2018 are:

* Agnico Eagle Mines Ltd. (AEM-N/AEM-T)

Analyst Farooq Hamed, who has an "outperform" rating and $62 (U.S.) target for the stock, said: "With a track record of exceeding annual production guidance over the past six years and a low jurisdictional risk operating profile, Agnico Eagle continues to be one of our top investment ideas in the gold producer peer group. Further, Agnico remains one of the few senior gold producers with a healthy growth profile over the next 3 years that can be funded internally from operating cash flows and a strong balance sheet."

* B2Gold Corp. (BTO-T)

Analyst Chris Thompson ("outperform" and $5 target): "We view B2Gold (BTO) as an intermediate gold producer on the cusp of delivering significant production growth and lower operating costs. Whilst BTO currently trades at a premium valuation to peers (1.2 times NAV versus 0.9 times NAV), we see BTO's share price benefiting from momentum driven by Fekola's ramp up (commissioned in December, ahead of schedule) and untapped exploration upside, reflective of our Outperform rating and our selection as a Best Pick for 2018."

* Bird Construction Inc. (BDT-T)

Analyst Frederic Bastien ("outperform" and $12 target): "We expect a strong management team, healthy balance sheet, preferred status for design-build work and growing backlog to see Bird Construction in good stead as we turn to next year and beyond."

* Boralex Inc. (BLX-T)

Analyst David Quezada ("outperform" and $26 target): "Despite being one of the top performing stocks in our coverage universe year-to-date, we note Boralex, trading at 11.4 times 2018 EV/EBITDA, continues to trade at a discount to the pure play renewable peer group at 12.3 times. As Boralex continues to execute on its growth plans, we believe the company will see its trading multiple expand."

* Canadian Pacific Railway Ltd. (CP-T/CP-N)

Analyst Steve Hansen ("outperform" and $245): "Despite recent momentum, CP trades at only 18 times the Street's 2018 EPS estimate, a sizeable discount versus its closest North American rail peers. Given the constructive outlook described herein, we expect this gap to narrow through 2018."

* Cineplex Inc. (CGX-T)

Analyst Kenric Tyghe ("outperform" and $46 target): "We believe that with Cineplex particularly attractively priced on both an absolute and relative basis, following a summer 2017 box office performance that was the worst we've seen since 2006 and concerns on broader threats to the exhibition model, that heading into a very good 2018 film slate (on an easy comp) Cineplex is well positioned for a strong performance, in our opinion."

* DIRTT Environmental Solutions Ltd. (DRT-T)

Mr. Quezada ("strong buy" and $10 target): "We highlight DIRTT as a top pick, underpinned by the company's compelling value proposition, which utilizes prefabricated, modular construction as well as the company's proprietary ICE software in providing key benefits relative to conventional construction such as 75-per-cent shorter project timelines and cost certainty. Based on this, we believe DIRTT will continue to become increasingly cost competitive as conventional construction costs continue to rise due to an increasingly acute shortage of skilled labour in North America."

* ECN Capital Corp. (ECN-T)

Analyst Brenna Phelan ("outperform" and $5 target): "ECN Capital Corp. (ECN) is in the late stages of transitioning its business model from a balance sheet intensive, low ROE [return on equity] lessor of equipment and capital assets to a high growth originator and servicer of consumer finance loans. Over the past year, ECN has divested of both its U.S. and Canadian Commercial & Vendor Finance businesses, sold 65 per cent of its railcar finance portfolio and deployed $540-million into two niche consumer finance businesses. We expect a third acquisition in the near-term, which should accelerate the shift in earnings mix to high growth, fee-based, asset-light revenues, supporting a transition to a price-to-earnings -based valuation and incremental upside to the share price.

* Encana Corp. (ECA-N/ECA-T)

Analyst Chris Cox ("strong buy" and $16 U.S. target): "We see Encana as the most compelling risk-reward opportunity in the large cap energy space heading into 2018. We believe the combination of a falling leverage profile, improving returns on capital and a self-funded growth outlook are unique among North American E&Ps, especially among those exhibiting top-quartile growth, such as Encana."

* Franco-Nevada Corp. (FNV-N/FNV-T)

Analyst Brian MacArthur ("outperform" and $90 U.S. target): "Franco is a gold-focused royalty/streaming company with a diversified, high-quality asset base in favourable jurisdictions. Free cash flow is expected to accelerate after final payments on Cobre Panama are made and Cobre Panama starts producing. The company has a strong balance sheet to finance potential future deals and support its dividend, which has increased every year."

* Interfor Corp. (IFP-T)

Mr. Swetlishoff ("strong buy" and $29 target): "We have conviction that we are in the early stages of a multi-year run in lumber pricing. Accordingly, we forecast strong earnings growth and free cash flow (FCF) for all RJL covered Canadian lumber producers and advocate investors add to positions. Interfor is our top pick due to its high operating leverage to the commodity (a pure-play lumber producer) with a unique geographic hedge against U.S. protectionism and FX volatility. With effective tax shields in place, we expect strong earnings to translate into strong FCF, supporting organic earnings growth from the recently announced multi-year U.S. South strategic capital plan. We see material upside to our target and recommend investors add to positions."

* InterRent Real Estate Investment Trust (IIP.UN-T)

Analyst Ken Avalos ("outperform" and $9.50 target): "Multi-family apartments are enjoying strong fundamentals as affordability, immigration, and job growth drive demand amid limited supply. National vacancy rates are 3-4-per-cent SPNOI [same-property net operating income] growth (ex. Alberta) has averaged 5 per cent year-to-date, and the sector has been the best performer amongst the big four asset classes, with four of the five Canadian-based REITs in the top 10 performers thus far (25-per-cent average total return versus 8 per cent for the TSX Capped REIT Index). We believe it will continue to be among the best performing asset classes in 2018 as well as fundamentals are likely to stay strong."

* Kelt Exploration Ltd. (KEL-T)

Analyst Jeremy McCrea ("strong buy" and $9.75 target): "A year ago we selected Kelt as our 2017 Best Pick based on its shift from land accumulation to development. Despite a difficult macro environment for many Canadian producers, Kelt was able to execute on this shift in 2017 with the successful completion of a number of high-intensity pads across its Montney acreage. As a result of the development work in 2017, Kelt has de-risked a significant portion of the Upper-Montney at Inga and showed strong results from its large Alberta Montney land blocks at Pouce Coupe, Progress, and Valhalla/La Glace. We expect that this momentum will continue into 2018 as Kelt has laid out another year of meaningful capital spending with continued focus on pad developments and high-intensity completions"

* Paramount Resources Ltd. (POU-T)

Analyst Kurt Molnar ("strong buy" and $36 target): "In recent years, some of the best performing E&Ps (in a very difficult 'tape') have shared some interesting characteristics. Sharply improved balance sheets/liquidity derived from non-core asset sales that then liberate a more rapid pace of capitalization, with retained capacity still to do more, paired with a premium project with leverage to oil or condensate. Those inputs then derive a rapid pace of year-over-year growth that can be sustained into a 2-3 year outlook (rather than a one-year bounce above an ugly trough); wherein, that growth rate really matters beyond the headlines due to the fact that it is accompanied by high returns on invested capital. These descriptors have been the drivers of relative market alpha from the likes of NuVista, Enerplus and Paramount. We think what has worked in the past will continue to work into 2018. In this context, we are making Paramount our top pick for 2018 given that we think they are only partially done their non-core asset sale focus, where we expect proceeds from potential future sales to keep Paramount with one of the best balance sheet strengths in the entire group. At the same time we expect they will likely put up some of the best production growth rates among their intermediate producer peers, while also simultaneously continuing to rapidly increase leverage to liquids while reducing cash costs (G&A and interest expenses in particular). Finally, consider that we expect oil prices to continue to recover and view the Paramount market macro as very strong, backstopped by an insider position of almost 50 per cent, noting a tight float for a stock that we expect needs to be added to many portfolios that want to track or beat the energy index."

* Sierra Wireless, Inc. (SWIR-Q/SW-T)

Analyst Steven Li ("outperform" and $30 U.S. target): "Sierra Wireless shares have round tripped since we downgraded on Mar-27-17 (down 29 per cent versus NASDAQ up 18 per cent). That was not for a lack of execution, as the past three quarters the company posted earnings beats. Importantly, in our view, no one is paying much attention to SWIR's recent design wins for internet connectivity in automobiles (3 with VW alone – and global in scope, Geely and others). We calculate that the connected car opportunity alone could be worth $3/share. The company also just concluded the acquisition of Numerex (dilutive in year 1, accretive after). We believe that the share pullback has presented an entry point, and we are highlighting SWIR as our Best Pick for 2018.."

* StorageVault Canada Inc. (SVI-X)

Analyst Johann Rodrigues ("strong buy" and $3 target): "StorageVault is the only public Canadian self-storage company. The self-Canadian storage industry is still in early innings and well behind the US in terms of maturity. However, U.S self-storage has been the best performing asset class over the past decade, with a 16-per-cent annualized return. The Company has been the best performing stock in the Canadian real estate space this year and we think it could be next year too."

DIRTT, ECN Capital, Interfor, Kelt and StorageVault were the lone holdovers from the firm's 2017 Best Picks list.

The following stocks were removed: Algonquin Power & Utilities Corp. (AQN-T), Canadian Tire Corp. (CTC.A-T), Delphi Energy Corp. (DEE-T), Endeavour Mining Corp. (EDV-T), FirstService Corp. (FSV-Q/FSV-T), Gibson Energy Inc. (GEI-T), Open Text Corp. (OTEX-Q/OTEX-T), Superior Plus Corp. (SPB-T) and Tricon Capital Group Inc. (TCN-T)

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