Stocks surged in May. The S&P/TSX Composite Index rallied 5.4 per cent with healthy gains in all 11 sectors.
The top performing sectors were industrials, technology, consumer discretionary and financials with price returns of 8.8 per cent, 8 per cent, 7.9 per cent and 6.4 per cent, respectively. Lagging sectors were health care, consumer staples and utilities with gains of 0.9 per cent, 1.2 per cent and 1.2 per cent, respectively. Year-to-date, the S&P/TSX Composite Index is up 5.9 per cent.
The top 10 performers in the TSX Index during the month were:
- Air Canada (AC-T), rallying 37 per cent
- Aritzia Inc. (ATZ-T), up 37 per cent
- Celestica Inc. (CLS-T), up 35 per cent
- NFI Group Inc. (NFI-T), up 34 per cent
- AtkinsRéalis Group Inc. (ATRL-T), up 32 per cent
- Finning International Inc. (FTT-T), up 30 per cent
- NGEx Minerals Ltd. (NGEX-T), up 30 per cent
- BRP Inc. (DOO-T), up 29 per cent
- Cameco Corp. (CCO-T), up 29 per cent
- Bird Construction Inc. (BDT-T), up 28 per cent
Earnings estimates have increased 4.6 per cent over the past four weeks with earnings growth of 6.3 per cent now expected over the next 12 months.
Stocks with positive changes to their target prices of 10 per cent or more over the past month include two energy stocks, two consumer staples stocks, one industrial stock, one technology stock and one gold stock. They are:
- TerraVest Industries Inc. (TVK-T), target price lifted 27 per cent
- Loblaw Companies Ltd. (L-T), target price lifted 14 per cent
- George Weston Ltd. (WN-T), target price lifted 14 per cent
- Finning International Inc. (FTT-T), target price lifted 14 per cent
- Lundin Gold Inc. (LUG-T), target price lifted 13 per cent
- Peyto Exploration & Dev. Corp. (PEY-T), target price lifted 12 per cent
- Kinaxis Inc. (KXS-T), target price lifted 10 per cent
Stocks with negative revisions to their target prices of 10 per cent or more over the past month include three energy stocks and one health care stock:
- CES Energy Solutions Corp. (CEU-T), target price lowered by 10 per cent
- Vermilion Energy Inc. (VET-T), target price lowered by 10 per cent
- Baytex Energy Corp. (BTE-T), target price lowered by 11 per cent
- Bausch Health Companies Inc. (BHC-T), target price lowered by 15 per cent
The S&P/TSX Composite Index is currently trading at a price-to-earnings multiple of 16.5 times the 2025 consensus earnings estimate, relatively in-line with its 10-year historical average forward P/E multiple of 16.6 times, according to Bloomberg.
Now, here’s a look at analysts’ current target prices, recommendations, forecast returns and yields for all 217 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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