The Canadian stock market has bounced resoundingly after its early October plunge, but there are still some screaming bargains to be had.
Screaming is what you've been doing if you're a long-time investor in the energy and material sectors as well as the TSX Venture Index. Each has lost money on a cumulative basis over the year to date, the past 12 months, the past three years and the past five years. Each, if you have the stomach for it, can be bought for your portfolio using exchange-traded funds.
The S&P/TSX capped energy index is the most surprisingly awful of these three sectors. Falling oil prices have weighed on energy stock prices lately, but the sector has a cumulative five-year loss of almost 11 per cent. Mind you, there have been money-making opportunities in energy over that period. The index surged in early 2011 and early 2014, only to fall hard. The five-year chart suggests current levels might offer a decent entry point. ETF to consider: The iShares S&P/TSX Capped Energy Index ETF (XEG).
The S&P/TSX capped materials index has been an unmitigated disaster in the past five years – the cumulative loss over that period is 27 per cent. The sector has made numerous moves higher in recent years, only to fall back again. Currently, the materials index is flirting with its five-year low. Care to jump in? The iShares Capped Energy Materials Index ETF (XMA) will do the job.
The horribleness of the S&P/TSX Venture Index is really quite something. After a rally in late 2010, the index has been in a near constant decline. The October stock market correction seems to have triggered yet another down phase. The poor performance of this index is a reflection of the fact that Canada's small– and micro-cap landscape is two-thirds dominated by resource stocks. Bigger companies in energy and mining have been slammed. The smaller names have been eviscerated. In a hard-driving speculative market, the venture index might take off. If you can foresee that day, take a look at the iShares S&P/TSX Venture Index ETF (XVX).