Strong seasonal trends were firmly in force last month. In July, the S&P/TSX Composite Index rallied 1.5 per cent, closing out the month just shy of a record high.
The top performing sectors were communication services, technology, real estate, energy, utilities and consumer discretionary with price returns of 5.01 per cent, 4.45 per cent, 4.40 per cent, 2.59 per cent, 2.48 per cent and 2.04 per cent, respectively. Only two sectors finished the month in negative territory. The industrials and health care sectors reported negative price returns of 0.54 per cent and 6.47 per cent, respectively. Year-to-date, the S&P/TSX Composite Index is up 10.2 per cent.
The top 10 performers in the TSX Index during the month were:
- Energy Fuels Inc. (EFR-T), rallying 60 per cent
- Bombardier Inc. (BBD-B-T), up 36 per cent
- Celestica Inc. (CLS-T), up 30 per cent
- NovaGold Resources Inc. (NG-T), up 28 per cent
- NGEx Minerals Ltd. (NGEX-T), up 23 per cent
- Baytex Energy Corp. (BTE-T), up 20 per cent
- Parex Resources Inc. (PXT-T), up 18 per cent
- Colliers International Group Inc. (CIGI-T), up 17 per cent
- FirstService Corp. (FSV-T), up 15 per cent
- Toromont Industries Ltd. (TIH-T), up 15 per cent
Stocks with the largest positive changes to their target prices over the past month include:
- Celestica Inc. (CLS-T), up 70 per cent
- Bombardier Inc. (BBD-B-T), up 29 per cent
- Aritzia Inc. (ATZ-T), up 22 per cent
- First Majestic Silver Corp. (AG-T), up 15 per cent
- First Quantum Minerals Lt. (FM-T), up 15 per cent
- MDA Space Ltd. (MDA-T), up 15 per cent
- Endeavour Silver Corp. (EDR-T), up 15 per cent
Stocks with the largest negative revisions to their target prices over the past month include:
- Teck Resources Ltd. (TECK-B-T), down 9 per cent
- West Fraser Timber Co. Ltd. (WFG-T), down 6 per cent
- Winpak Ltd. (WPK-T), down 6 per cent
- ATS Corp. (ATS-T), down y 5 per cent
As of July 31, the S&P/TSX Composite Index was trading at a price-to-earnings multiple of 17.3 times the 2025 consensus earnings estimate, above the 10-year historical average forward P/E multiple of 16.6 times, according to Bloomberg.
In August, the S&P/TSX Composite Index has posted gains in 14 of the past 20 years. The six years with negative price returns were 2023, 2022, 2018, 2015, 2011 and 2007. In five of those six negative years, losses during the month amounted to between 1 and 2 per cent. However, 2015 was an outlier with the TSX Index declining 4.2 per cent.
With the second quarter earnings season well underway, earnings estimates have decreased 0.3 per cent over the past four weeks. Over the next 12 months, earnings growth is now forecast to come in at 4.65 per cent.
Now, here’s a look at analysts’ current target prices, recommendations, forecast returns and yields for all 212 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. Data is as of July 31.
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.
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