Stock Market Smarts: A Few Bright Spots from 2015

It wasn’t all doom and gloom last year. Here are a few stocks that bucked the losing trend.

It was a miserable year for the TSX. At the close of trading on Christmas Eve, Canada’s benchmark index was down 9 per cent for 2015 (6.3 per cent on a total return basis). Only Brazil and Singapore did worse.

As you might expect, the energy sector a big contributor to the decline, losing 24.8 per cent. Given the sector’s 18.8 per cent weighting, it was huge drag on the TSX.

It wasn’t the biggest loser, however. The Capped Metals and Mining Index lost a horrendous 45.6 per cent, the worst one-year performance of a sub-index in years. Financials, the largest TSX sector with 38.4 per cent weighting, didn’t provide any help, losing 5.1 per cent.

But there were a few bright spots amongst all the rubble. Information technology stocks were up 14.4 percent for the year, the healthcare sector was ahead 25.6 per cent, and consumer staples were up 11.6 per cent.

Some individual stocks bucked the downtrend and pleasantly surprised investors who own them. Click through for six that especially impressed me.

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Enghouse Systems (TSX: ESL). Based in Markham, Ontario Enghouse Systems is a leading global provider of enterprise software solutions serving a variety of vertical markets. The company has expanded through a combination of organic growth and strategic acquisitions. The company recently released fourth quarter and fiscal year-end 2015 results (to Oct. 31) that showed a 27 per cent increase in revenue and an improvement of 28.7 per cent in adjusted EBITDA. Net income was up 5.7 per cent. The company has a pristine balance sheet with $98 million in cash and short-term investments and zero long-term debt.

The stock ended 2014 at $41.49 and closed on Dec. 24 at $74.25 for a gain of 79 per cent for the year.

Alimentation Couche-Tard (TSX: ATD.B). This stock is a marvel – it just keeps going and going and going, thanks to some brilliant acquisitions by a first-rate management team. From a small Quebec-based convenience store chain it as grown into an international powerhouse with a strong presence in the U.S. and Europe, as well as its home country.

The shares started the year at $48.69 and finished on Dec. 24 at $62.26 for a gain of 27.9 per cent in 2015.

Boyd Group Income Fund (TSX: BYD.UN). This little-known company (one of the few to retain income trust status) has two things going for it. First, it’s in an almost recession-proof business – automobile repair. Second, it has major exposure to the U.S. dollar. About 80 per cent of Boyd’s revenue is in American currency, which, as we all know, has been running wild this past year. When the loonie turns back up, Boyd may not look quite so attractive, although the business is growing at an impressive rate – third-quarter revenue was up 38 per cent.

The shares ended 2014 at $47.60 and were recently at $64.57 for an impressive gain of 35.6 per cent on the year.

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Franco-Nevada (TSX, NYSE: FNV) and Agnico Eagle Mines (TSX, NYSE: AEM). It was a lousy year for gold. The price of bullion was down 9 per cent from its 2014 close of US$1,184.10, finishing on Christmas Eve at US$1,077.88. Many of the major gold miners suffered even more. Barrick Gold (TSX, NYSE: ABX) was off 13.3 per cent from its 2014 close of $12.52 while Goldcorp (TSX: G, NYSE: GG) dropped 21.5 per cent from its 2014 finish at $21.51.

But two gold stocks that not only held their ground but actually made a profit despite the fall in bullion were royalty company Franco-Nevada and miner Agnico-Eagle. FNV did well because it has a low risk business model – its royalty structure means it is not exposed to any of the costs of exploration and production.

It closed on Dec. 24 at $66.34, up 16 per cent from its 2014 finishing price. AEM parlayed increased output with a cut of almost 30 per cent in cost per ounce produced to keep itself in the black and make investors happy.

It finished at $37.73 on Dec. 24, which represented a gain of 30.5 per cent this year. Impressive!

Suncor Energy (TSX, NYSE: SU). Suncor shares didn’t advance in 2015 but they didn’t lose much either. They started the year at $36.90 and finished on Christmas Eve at $36.89, essentially breaking even for 2015. Compare that to the widespread carnage in the oil patch and it’s an amazing result. Give a lot of the credit to Suncor’s relentless cost controls and its downstream refinery business whose profitability has helped to offset some of the losses from the drop in the oil price.

Now the company is in acquisition mode, aggressively pursuing Canadian Oil Sands (TSX: COS) in a hostile takeover bid. If that succeeds – we should know this month – who knows what company will be next on Suncor’s target list.

Gordon Pape is Editor and Publisher of the Internet Wealth Builder and Income Investor newsletters. For more information and details on how to subscribe, go to www.buildingwealth.ca.