The Canadian Core Buy list outperformed the S&P/TSX 60 Index during July, posting a total return of 1.37% compared with the benchmark's 0.97%. The top performers for the period were Suncor Energy SU and Fortis FTS, with total returns of 7.1% and 6.8%, respectively. These gains were partially offset by weaker performance from Potash Corp. of Saskatchewan POT, which posted a total return of -6.8%, in addition to financial-services firms National Bank of Canada NA and IGM Financial IGM, with total returns of -2.5% and -2.9%, respectively.
The Core Buy list retains its cumulative outperformance against the benchmark, with a total return since inception of 158.3% versus 102.5% for the S&P/TSX 60, a difference of 55.8 percentage points.
Our model recommended several changes to August's Core Pick list. Tourmaline Oil TOU was newly added to the Core Buy list, and Canadian Imperial Bank of Commerce CM was raised from the Core Hold list to the Core Buy list. These changes caused IGM and Fortis to be moved from the Core Buy list to the Core Hold list. Valeant Pharmaceuticals International VRX was moved from the Core Hold list to the Core Sell 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 40.1% discount to our fair value estimate of $30.
Canadian Imperial Bank of Commerce was added to the list this month. The stock trades at a 23.4% discount to our fair value estimate of $122.
Canadian Pacific Railway Ltd remains on the list from last month. The stock trades at a 2.5% discount to our fair value estimate of $216.
National Bank of Canada remains on the list from last month. The stock trades at a 28.5% discount to our fair value estimate of $64.
Potash Corp of Saskatchewan Inc remains on the list from last month. The stock trades at a 31.6% discount to our fair value estimate of $52.
Rogers Communications Inc Class B remains on the list from last month. The stock trades at a 4.5% discount to our fair value estimate of $48.
Suncor Energy Inc remains on the list from last month. The stock trades at a 16.3% discount to our fair value estimate of $44.
Tourmaline Oil Corp was added to the list this month. The stock trades at a 19.2% discount to our fair value estimate of $40.
The Canadian Income Buy list underperformed the S&P/TSX 60 index during July, posting a total return of -0.35% to the benchmark's 0.97%. The weak performance of the Buy list was primarily driven by Peyto Exploration & Development PEY and Potash Corp. of Saskatchewan POT with total returns of -6.9% and -6.8%, respectively. The Income Buy list has generated a cumulative return since inception of 155.9%, while the S&P/TSX 60 has returned 102.5% over the same period, a difference of 53.4 percentage points.
Our model recommended one change to our Income Pick list for August. ARC Resources ARX was promoted to the Income Buy list from the Income Hold list. As a result, Fortis FTS was moved from the Income Buy list to the Income Hold list.
A recap of stocks on this month's Consider Buy List
AGF Management Limited remains on the list from last month. The stock offers a dividend yield of 5.4% and trades at a 25.4% discount to our fair value estimate of $8.
ARC Resources Ltd was added to the list this month. The stock offers a dividend yield of 6.1% and trades at a 2.2% discount to our fair value estimate of $20.
Canadian Imperial Bank of Commerce remains on the list from last month. The stock offers a dividend yield of 4.7% and trades at a 23.4% discount to our fair value estimate of $122.
IGM Financial Inc remains on the list from last month. The stock offers a dividend yield of 5.8% and trades at a 14.2% discount to our fair value estimate of $45.
Peyto Exploration & Development Corp remains on the list from last month. The stock offers a dividend yield of 4.7% and trades at a 32.6% discount to our fair value estimate of $42.
Potash Corp of Saskatchewan Inc remains on the list from last month. The stock offers a dividend yield of 5.4% and trades at a 31.6% discount to our fair value estimate of $52.
Rogers Communications Inc Class B remains on the list from last month. The stock offers a dividend yield of 4.2% and trades at a 4.5% discount to our fair value estimate of $48.
TransCanada Corp remains on the list from last month. The stock offers a dividend yield of 4.1% and trades at a 7.6% discount to our fair value estimate of $55.
