More than 8,000 analysts at North American investment brokerages are ranked by TipRanks.com and about five per cent of them have attained the survey’s top rating of five stars, based on how often they are right and their average returns.
During the week ending Sept. 16, several of the five-star analysts issued or reiterated buy recommendations on Canadian stocks; just under two dozen of the picks were assigned target prices that imply a gain of more than 20 per cent in their stocks over the next 12 months. Here is the list in table form, sorted by 12-month upside potential.
As can be seen, analysts expect shares in four companies to gain 100 per cent or more in the coming year:
- Ascot Resources Ltd. is a B.C. gold miner focused on re-starting the processing plant at the historic Premier gold property – once North America’s largest gold mine.
- Blackline Safety Corp., a provider of employee safety monitoring devices, is cutting costs and hiking product prices to become cash flow positive.
- Torex Gold Resources Inc., based in Toronto, is working the Morelos gold property in Mexico.
- STEP Energy Services Ltd., a provider of technical services to oil-and-gas producers, is in a good spot: Two analysts are issuing buy recommendations and both have solid track records. Cole Pereira has been right 61 per cent of the time with a 27.3-per-cent average gain while Keith Mackey has been right 64 per cent of the time with an average gain of 23.3 per cent.
Copper miner First Quantum Minerals Ltd. was recommended by more than one analyst, as well. Dalton Baretto from Canaccord Genuity sees an appreciation of 46 per cent and Sam Crittenden from RBC Capital sees 42 per cent. The two have average returns of 24.2 per cent and 16.2 per cent, respectively.
Brookfield Asset Management Inc. is another company that received votes from two analysts. Both are among the most successful of stock pickers: Mark Rothschild of Canaccord Genuity has been right 75 per cent of the time while Cherilyn Radbourne at TD Securities has been right 66 per cent of the time.
Dollarama Inc., a retailer of merchandise under $5, appears at the bottom of the list with just a 22 per cent forecasted price gain. It is perhaps worth highlighting because a total of three analysts in the five-star group advised buying the company’s stock during the past week. Two of them do not appear on the table because their 12-month estimates were just below the 20-per-cent cut-off.
Fission Uranium Group Corp. is anticipated by Katie Lachapelle of Canaccord Genuity to be nearly 90 per cent higher within twelve months. The company’s business is exploring and developing uranium assets, mainly in the Patterson Lake area of the Athabasca Basin District. With oil-and-gas resources now captive to geopolitical risks, nuclear power could see renewed interest as an alternative energy source.
There are a few caveats to consider. First, even five-star analysts rarely get more than 75 per cent of their calls right, so a list of their picks should be viewed more as a screening tool. Second, TipRank.com ratings used here are based on analysts’ performance over the past year; the survey’s ratings for two-year periods might offer a better measure. Third, some analysts with top track records may have benefited from specializing in a hot sector, such as the oil & gas industry over the past year. Fourth, brokerage analysts are usually bottom-up stock pickers who don’t deal with macro issues a lot, so their picks have a better chance of hitting 12-month price targets when the economy is not in recession.
Larry MacDonald also writes at Investment Journey.