The S&P/TSX SmallCap Index fell sharply for a second consecutive month, posting a loss of 2.44 per cent in July and underperforming the S&P/TSX Composite Index, which advanced 1.06 per cent.
Last month, only four sectors in the TSX SmallCap Index delivered positive price returns: energy, real estate, health care and utilities with gains of 4.87 per cent, 1.58 per cent, 0.94 per cent and 0.75 per cent, respectively.
Sectors that were the largest detractors were technology, materials, communication services and financials with negative returns of 15.09 per cent, 7.43 per cent, 5.66 per cent and 4.13 per cent, respectively.
Analysts’ forecast returns, recommendations and yields for all stocks in the S&P/TSX Composite Index
In the first seven months of the year, the TSX SmallCap Index is up 14.15 per cent, compared to a 11.08 per cent return for the TSX Composite Index.
The top 10 performers in the TSX SmallCap Index in July were:
- Bausch Health Companies Inc. (BHC-T), up 38 per cent
- Mattr Corp. (MATR-T), up 33 per cent
- Obsidian Energy Ltd. (OBE-T), up 30 per cent
- Mullen Group Ltd. (MTL-T), up 27 per cent
- Vermilion Energy Inc. (VET-T), up 26 per cent
- Tenaz Energy Corp. (TNZ-T), up 22 per cent
- Valeura Energy Inc. (VLE-T), up 20 per cent
- Methanex Corp. (MX-T), up 19 per cent
- Gran Tierra Energy Inc. (GTE-T), up 18 per cent
- Imperial Metals Corp. (III-T), up 16 per cent.
Stocks with large positive revisions to their average target prices over the past month include:
- Mattr Corp. (MATR-T), increased 44 per cent to $20.57 from $14.25
- Mullen Group Ltd. (MTL-T), increased 35 per cent to $29.50 from $21.80
- Neo Performance Materials Inc. (NEO-T), increased 25 per cent to $54.45 from $43.55
- Badger Infrastructure Solutions Ltd. (BDGI-T), increased 20 per cent to $111 from $92.44.
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.