The Canadian Core Buy list modestly outperformed the S&P/TSX 60 Index during the month of January, posting a total return that came in at -0.9% compared to the benchmark's -1.0%. The top performer for the period was Enbridge ENB with a total return of 5.7%. However, the strong result was more than offset by poor performance from Valeant Pharmaceuticals International VRX and Canadian Pacific Railway CP with total returns of -8.2% and -4.7%, respectively.
The Core Buy list retains its cumulative outperformance against the benchmark with a total return since inception of 145.0% versus 82.0% for the benchmark S&P/TSX 60 Index, a difference of 63.0 percentage points.
Our model recommended several changes to February's Core Pick list. Potash Corp. of Saskatchewan POT was removed from the Core Buy list due to a heightened uncertainty rating to Very High, which lies outside of our uncertainty criteria for the constituents of the Core Pick list. Canadian Pacific Railway was moved from the Core Buy list to the Core Hold list. The two aforementioned names were replaced by Restaurant Brands International QSR from the Core Hold list and Suncor Energy SU, a new addition to the list. Additionally, Fortis FTS was lowered from the Core Hold list to the Core Sell list.
A recap of stocks on this month's Consider Buy List
Bank of Nova Scotia remains on the list from last month. The stock trades at a 26.8% discount to our fair value estimate of $77.
Cameco Corp. remains on the list from last month. The stock trades at a 29.7% discount to our fair value estimate of $24.
Canadian Imperial Bank of Commerce remains on the list from last month. The stock trades at a 32% discount to our fair value estimate of $133.
Enbridge Inc. remains on the list from last month. The stock trades at a 13% discount to our fair value estimate of $54.
National Bank of Canada remains on the list from last month. The stock trades at a 38.1% discount to our fair value estimate of $64.
Restaurant Brands International Inc. was added to the list this month. The stock trades at a 13.9% discount to our fair value estimate of $55.
Suncor Energy Inc. was newly added to the list this month. The stock trades at a 16.2% discount to our fair value estimate of $38.
Valeant Pharmaceuticals International Inc. remains on the list from last month. The stock trades at a 36.5% discount to our fair value estimate of $210.
The Canadian Income Buy list outperformed the S&P/TSX 60 Index during the month of January, posting a total return of 2.7% to the benchmark's -0.9%. The stronger performance of the Buy list was very much driven by an exceptional performance from Peyto Exploration & Development PEY, posting a total return of 21.6% for the month of January. The worst performance came from AGF Management AGF.B with a total return of -9.4%.
The Income Buy list has generated a cumulative return since inception of 141.6%, while the S&P/TSX 60 benchmark returned 82.0% over the same period, a difference of 59.6 percentage points.
Our model recommended several additional changes to our Income Pick list for the month of February. Potash Corp. of Saskatchewan POT was removed from the Income Buy list due to a heightened uncertainty rating to Very High, which lies outside of our uncertainty criteria for the constituents of the Income Pick list. Peyto Exploration & Development was transferred to the Income Hold list, and the two open positions on our Income Buy list were filled by Enbridge ENB and Suncor Energy SU, constituents of the Hold list last month. In addition, TransCanada TRP and Fortis FTS were lowered from the Income Hold list to the Income Sell list.
A recap of stocks on this month's Consider Buy List
AGF Management Ltd remains on the list from last month. The stock offers a dividend yield of 6.9% and trades at a 22.5% discount to our fair value estimate of $6.
Enbridge Inc. was added to the list this month. The stock offers a dividend yield of 4.5% and trades at a 13% discount to our fair value estimate of $54.
IGM Financial Inc. remains on the list from last month. The stock offers a dividend yield of 6.3% and trades at a 15% discount to our fair value estimate of $42.
National Bank of Canada remains on the list from last month. The stock offers a dividend yield of 5.5% and trades at a 38.1% discount to our fair value estimate of $64.
Pembina Pipeline Corp remains on the list from last month. The stock offers a dividend yield of 5.9% and trades at a 7.9% discount to our fair value estimate of $34.
Shaw Communications Inc. remains on the list from last month. The stock offers a dividend yield of 4.9% and trades at a 3.8% discount to our fair value estimate of $25.
Suncor Energy Inc. was added to the list this month. The stock offers a dividend yield of 3.6% and trades at a 16.2% discount to our fair value estimate of $38.
TELUS Corp. remains on the list from last month. The stock offers a dividend yield of 4.5% and trades at a 7.2% discount to our fair value estimate of $42.
