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.
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.
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!