Stock performance was mixed in February.
The S&P/TSX Composite Index fell 0.55 per cent with four of the 11 sectors closing out the month in the green. The utilities, consumer discretionary, materials, and communication services sectors realized gains of 2.8 per cent, 1.9 per cent, 1.7 per cent, and 1.5 per cent, respectively. Sectors with the largest declines were energy, health care and technology reporting losses of 2 per cent, 2.3 per cent and 3.7 per cent, respectively. Year-to-date, the S&P/TSX Composite Index is up 2.69 per cent.
The top 10 performers in the TSX Index during the month were:
- Innergex (INE-T), rallying 87 per cent on the back of a takeover offer from CDPQ
- SSR Mining (SSRM-T), up 24 per cent
- Maple Leaf Foods (MFI-T), up 19 per cent
- Finning International (FTT-T), up 18 per cent
- Northland Power (NPI-T), up 17 per cent
- Dundee Precious Metals (DPM-T), up 15 per cent
- Boralex (BLX-T), up 15 per cent
- Great-West Lifeco (GWO-T), up 14 per cent
- TMX Group (X-T), up 14 per cent
- Brookfield Business Partners LP (BBU-UN-T), up 14 per cent
Over the past month, average target prices for 10 stocks were revised by 10 per cent or more, of which three were lifted and seven declined. The three stocks that saw their average target prices rise were SSRM Mining (SSRM-T), Orla Mining (OLA-T) and CAE (CAE-T) with increases of 26 per cent, 19 per cent and 14 per cent, respectively. The seven stocks whose average target prices fell by 10 per cent or more were: Paramount Resources (POU-T), TFI International (TFII-T), Bausch Health (BHC-T), MTY Food Group (MTY-T), Lightspeed Commerce (LSPD-T), Ero Copper (ERO-T) and Eldorado Gold (ELD-T).
Looking ahead, March has historically been a positive month for the S&P/TSX Composite Index. Over the past two decades, the average price return for the TSX Index is 0.4 per cent. However, that includes the 17.7 per cent decline realized in March 2020 due to COVID. Excluding this figure, the average price return in March is 1.3 per cent.
Now, here’s a look at analysts’ current target prices, recommendations, forecast returns and yields for all 220 securities in the S&P/TSX Composite Index grouped by sector and ranked according to their expected price returns (excluding dividend and distribution income). The posted target price for each security is an average of all available target prices from analysts. A target price typically reflects an expected share or unit price 12 months from now based on an analyst’s financial modelling, such as a discounted cash flow or sum-of-the-parts model. For the yield provided, Bloomberg calculates this figure by annualizing the most recent announced dividend or distribution value.
It’s important to note that high target prices, which imply stellar returns that seem unbelievable may be just that - unrealistic. At times, when a stock price falls analysts may maintain their bullish expectations, inflating the forecast return. In addition, an outlier (extreme target price) can skew the average target price, to the upside or downside, particularly when the number of analysts covering a stock is low. Don’t let a huge projected gain lure you into a position – it is critical to look at the company and industry fundamentals.
Click here to download an Excel version of the report.
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