Skip to main content

Investors who seek to buy stocks when there is fear in the market may want to also consider stocks recommended by the best analysts at North American brokerages. The analysts are deemed best-in-class on the grounds they have received a 5-star rating from data-analytics firm TipRanks.com. The rating is awarded to those analysts whose recommendations are most often right and have the highest average return, a group largely confined to the top 5 per cent of the 8,050 analysts surveyed.

Over the past week, the top analysts issued or reiterated thirty buy recommendations on Canadian stocks, with target prices that imply an upside potential greater than 25 per cent over the next 12-months. Warning label: the gains could take longer to show up if a substantial recession occurs in 2022, a risk that some top-down analysts say cannot be easily dismissed.

Stocks recommended by 5-star analysts (sorted by upside potential)

CompanyAnalystBrokerage12-month upside potential
Akumin IncAKU-TNoel AtkinsonClarus Securities863.2%
Data Comm ManagementDCM-TNoel AtkinsonClarus Securities156.4%
EnerflexEFX-TJohn GibsonBMO Capital99.0%
VerticalScopeFORA-TDrew McreynoldsRBC Capital91.5%
Total Energy ServicesTOT-TCole PereiraStifel Nicolaus78.5%
Ether CapitalETHC-NEBill PapanastasiouStifel Nicolaus75.2%
Copperleaf TechCPLF-TRobert YoungCanaccord Genuity74.1%
Rubellite EnergyRBY-TMike MurphyBMO Capital69.6%
Headwater ExplorationHWX-TLuke Davis RBC Capital61.7%
Dexterra GroupDXT-TMichael DoumetScotiabank58.3%
CES Energy SolutionsCEU-TJohn GibsonBMO Capital52.8%
CES Energy SolutionsCEU-TCole PereiraStifel Nicolaus52.8%
Cronos GroupCRON-TMatt BottomleyCanaccord Genuity51.0%
Fortuna Silver MinesFVI-TDalton BarettoCanaccord Genuity49.4%
Wheaton Precious MetalsWPM-TCarey MacRuryCanaccord Genuity42.0%
Propel HoldingsPRL-TPhil HardieScotiabank41.3%
Peyto Exploration & DevPEY-TDan PayneNational Bank39.6%
goeasyGSY-TMario MendoncaTD Securities39.5%
SavariaSIS-TMichael DoumetScotiabank37.2%
Minto Apartment REITMI-UN-TMatt KornackNational Bank37.1%
CAE Inc.CAE-TFadi ChamounBMO Capital34.8%
CAE Inc.CAE-TSteve ArthurRBC Capital34.8%
Birchcliff EnergyBIR-TJeremy MccreaRaymond James32.3%
Birchcliff EnergyBIR-TRobert FitzmartynStifel Nicolaus29.9%
KinaxisKXS-TPaul TreiberRBC Capital29.7%
Bird ConstructionBDT-TFrederic BastienRaymond James29.6%
Element FleetEFN-TGraham RydingTD Securities28.7%
Element FleetEFN-TJaeme GloynNational Bank28.3%
KinaxisKXS-TRobert YoungCanaccord Genuity26.6%
InterRent REITIIP-UN-TMario SaricScotiabank25.2%

Source: TipRanks

When more than one 5-star analyst is bullish on a stock, it could signal that there is a greater chance the 12-month price target will be reached. In the current batch, there were five companies that had buy recommendations from two analysts: Birchcliff Energy Ltd., CAE Inc., CES Energy Solutions Corp., Element Fleet Management Corp., and Kinaxis Inc. No companies were recommended by three or more analysts.

The upside potential implicit in an analyst’s target price may be a proxy for their level of conviction. If so, the most bullish of analysts is Clarus Securities’ Noel Atkinson. His picks, Akumin Inc. and Data Communications Management Corp., are forecast to deliver the largest gains, 863 per cent and 156 per cent, respectively, over the next year. According to TipRanks.com, Mr. Atkinson’s recommendations over the past year were profitable 42.3 per cent of the time, with an average return of 18.6 per cent.

Akumin provides outpatient radiology and oncology services in the United States; the company recently replaced its chief financial officer and raised approximately US$30-million by selling a chunk of its account receivables to a third party. Brampton, Ont.-based Data Communications Management provides workflow and digital-asset services.

Enerflex Ltd., which supplies equipment to energy producers, has an upside potential of nearly 100 per cent, according to John Gibson of BMO Capital. Mr. Gibson’s selections during the past year have made money 61.5 per cent of the time, scoring an average annual return of 26.2 per cent.

Drew McReynolds of RBC Capital sees a gain of 91.5 per cent in VerticalScope Inc., which builds and operates cloud-based platforms for online communities. Mr. McReynolds has a success rate of 60 per cent for his picks, with an average gain of 9.7 per cent

There are some caveats to consider when using the TipRanks.com ratings. These caveats caution that stock picks from even the top analysts are not necessarily for immediate purchase. They are more of a screening tool to identify stocks for further investigation.

One caveat is that the 5-star ratings are based on analysts’ performance over the past year. Using TipRanks.com’s ratings for two-year periods might offer a better assessment. A second caveat: some analysts with stellar track records may have got a lift from specializing in a sector that is in a bullish upswing, such as the oil & gas industry presently.

Larry MacDonald also writes at Investing Journey.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Report an error

Editorial code of conduct

Tickers mentioned in this story