The Canadian Core Buy list underperformed the S&P/TSX 60 Index during the month of April, posting a total return that came in at 2.8% to the benchmark's gain of 3.4%. The strongest performers were Restaurant Brands International (QSR) and National Bank of Canada (NA) with total returns of 7.4% and 5.5%, respectively. These gains were partially offset by weak performance from Cameco (CCO) and CI Financial (CIX) with total returns of -5.8% and -2.8%, respectively.
The Core Buy list retains its cumulative outperformance against the benchmark; with a total return since inception of 138.5% versus 98.2% for the benchmark S&P/TSX, a difference of 40.3 percentage points.
Our model recommended several changes to May's Core Pick list. Tourmaline Oil (TOU) was downgraded from the Consider Buy to the Consider Hold list, and Pembina Pipeline (PPL) was downgraded from the Consider Hold list to the Consider Sell list. Fortis (FTS), Canadian National Railway (CNR) and Rogers Communications (RCI.B) were each raised from the Consider Sell to the Consider Hold list, and Shaw Communications (SJR.B) was newly added to the Consider Buy list.
A recap of stocks on this month's Consider Buy List
Cameco Corp. remains on the list from last month. The stock trades at a 31.7% discount to our fair value estimate of $23.
Canadian Imperial Bank of Commerce remains on the list from last month. The stock trades at a 23.8% discount to our fair value estimate of $133.
Canadian Pacific Railway remains on the list from last month. The stock trades at a 8.6% discount to our fair value estimate of $198.
CI Financial Corp. remains on the list from last month. The stock trades at a 20.6% discount to our fair value estimate of $35.
Enbridge remains on the list from last month. The stock trades at a 5.2% discount to our fair value estimate of $55.
National Bank of Canada remains on the list from last month. The stock trades at a 29.9% discount to our fair value estimate of $64.
Restaurant Brands International remains on the list from last month. The stock trades at a 1.5% discount to our fair value estimate of $55.
Shaw Communications was newly added to the list this month. The stock trades at a 7.1% discount to our fair value estimate of $25.
The Canadian Income Buy list modestly underperformed the S&P/TSX 60 Index during the month of April, posting a total return that came in at 3.3% to the benchmark's gain of 3.4%. Gains were led by Peyto Exploration and Development (PEY) and Restaurant Brands International (QSR) with total returns of 11.3% and 7.4%, respectively. Each company on the buy list posted positive returns during April with the exception of Cameco (CCO), which had a total return of negative 5.8%.
The Income Buy list has generated a cumulative return since inception of 168%, while the S&P/TSX benchmark returned 98.2% over the same period, a difference of 69.8 percentage points.
Our model recommended several additional changes to our Income Pick list for the month of May. Peyto Exploration and Development and Restaurant Brands International were downgraded from the Consider Buy list to the Consider Hold list. These names were replaced by Shaw Communications Class B (SJR.B) and TELUS (T), which were both raised from the Consider Hold list. Pembina Pipeline (PPL) was lowered from the Consider Hold list to the Consider Sell list.
A recap of stocks on this month's Consider Buy List
AGF Management remains on the list from last month. The stock offers a dividend yield of 6.2% and trades at a 13.3% discount to our fair value estimate of $6.
Cameco Corp. remains on the list from last month. The stock offers a dividend yield of 2.6% and trades at a 31.7% discount to our fair value estimate of $23.
Enbridge remains on the list from last month. The stock offers a dividend yield of 4.1% and trades at a 5.2% discount to our fair value estimate of $55.
IGM Financial remains on the list from last month. The stock offers a dividend yield of 5.7% and trades at a 1.3% discount to our fair value estimate of $40.
National Bank of Canada remains on the list from last month. The stock offers a dividend yield of 4.8% and trades at a 29.9% discount to our fair value estimate of $64.
Ritchie Bros Auctioneers remains on the list from last month. The stock offers a dividend yield of 2.4% and trades at a 10% discount to our fair value estimate of $40.
Shaw Communications was added to the list this month. The stock offers a dividend yield of 5.1% and trades at a 7.1% discount to our fair value estimate of $25.
TELUS Corp. was added to the list this month. The stock offers a dividend yield of 4.4% and trades at a 0.5% discount to our fair value estimate of $40.