The SmallCap Index continues to outperform the broader index.
In May, the S&P/TSX SmallCap Index advanced 3.25 per cent, while the S&P/TSX Composite Index rallied 2.37 per cent. For the first five months of the year, the S&P/TSX SmallCap Index is up 22.1 per cent compared to a 9.64 per cent price return for the S&P/TSX Composite Index.
Last month, eight sectors in the TSX SmallCap Index posted positive price returns with double-digit gains in two sectors. The technology and industrials sectors soared 26.1 per cent and 10.8 per cent, respectively.
Amongst the sector laggards were energy and consumer discretionary that reported negative price returns of 6.6 per cent and 3.5 per cent, respectively.
The top 10 performers in the TSX SmallCap Index last month were:
- Ballard Power Systems Inc. (BLDP-T), up 87 per cent
- BlackBerry Ltd. (BB-T), up 68 per cent
- Mattr Corp. (MATR-T), up 35 per cent
- Badger Infrastructure Solutions Ltd. (BDGI-T), up 34 per cent
- GoGold Resources Inc. (GGD-T), up 32 per cent
- Troilus Mining Corp. (TLG-T), up 32 per cent
- Firan Technology Group Corp. (FTG-T), up 32 per cent
- Faraday Copper Corp. (FDY-T), up 31 per cent
- Magellan Aerospace Corp. (MAL-T), up 30 per cent
- 5N Plus Inc. (VNP-T), up 30 per cent.
Stocks with large positive revisions to their average target prices over the past month include:
- Ballard Power Systems Inc. (BLDP-T), increased 53 per cent to $6.14 from $4.02
- Hammond Power Solutions Inc. (HPS-A-T), increased 49 per cent to $358.43 from $241.20
- NEO Performance Materials Inc. (NEO-T), increased 38 per cent to $41.38 from $30.01
- Mattr Corp. (MATR-T), increased 34 per cent to $13.68 from $10.18
Now, here’s a look at analysts’ current target prices, recommendations, forecast returns and yields for all securities in the S&P/TSX SmallCap 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.