The Canadian Core Buy list posted muted performance during the month of January compared to the S&P/TSX 60 Index. The Core Buy list trailed the index with a total return of -0.12% compared to a 0.58% gain for the S&P/TSX 60 Index.
The main performance laggards during the month were National Bank of Canada NA and Cameco Corp. CCO with total returns of -8.7% and -6.1%, respectively. The weakness of these names was largely offset, however, by a considerable gain from Potash Corp. of Saskatchewan POT, topping the Core Buy list with a total return of 12.6%. The Core Buy list retains its cumulative outperformance against the benchmark with a total return since inception of 157.7% versus 100.4% for the benchmark S&P/TSX 60 Index, a difference of 57.3 percentage points.
Our model recommended several changes to February's Core Buy list. CI Financial Corp. CIX and TELUS Corp. T were removed from the Core Buy list and transferred to the Core Hold list. Canadian Imperial Bank of Commerce CM and Valeant Pharmaceuticals International VRX were moved to the Core Buy list from the Core Hold list and the Core Sell list, respectively. Our model also recommended that BCE Inc. BCE be transferred 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 20.7% discount to our fair value estimate of $24.
Canadian Imperial Bank of Commerce was added to the list this month. The stock trades at a 17.4% discount to our fair value estimate of $108.
Cenovus Energy Inc. remains on the list from last month. The stock trades at a 35.6% discount to our fair value estimate of $39.
Encana Corp. remains on the list from last month. The stock trades at a 34.6% discount to our fair value estimate of $25.
National Bank of Canada remains on the list from last month. The stock trades at a 19.6% discount to our fair value estimate of $56.
Potash Corp. of Saskatchewan Inc. remains on the list from last month. The stock trades at a 10.6% discount to our fair value estimate of $52.
Rogers Communications Inc. remains on the list from last month. The stock trades at a 6.4% discount to our fair value estimate of $48.
Valeant Pharmaceuticals was added to the list this month. The stock trades at a 6.6% discount to our fair value estimate of $218.
The Canadian Income Buy list was outperformed by the S&P/TSX 60 Index during the month of January, posting a total return of -2.74% to the benchmark's gain of 0.58%.
Performance from the Income Buy list during January was negatively impacted by significant losses from AGF Management Ltd. AGF.B and Canadian Imperial Bank of Commerce CM, with total returns of -12.0% and -11.7%, respectively. A strong January performance from Potash Corp of Saskatchewan POT helped to offset the losses, as the company posted a total return of 12.6%. The Income Buy list has generated a cumulative return since inception of 175.6%, while the S&P/TSX benchmark has returned 100.4% over the same period, a difference of 75.2% percentage points.
Our model recommended several changes to our Income Buy list for the month of February. TransCanada Corp. TRP was added to the Consider Buy list from the Consider Hold list, trading positions with Suncor Energy SU. BCE Inc. BCE was transferred to the Consider Sell list from the Consider Hold 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 14.4% and trades at a 21.3% discount to our fair value estimate of $9.5.
ARC Resources Ltd. remains on the list from last month. The stock offers a dividend yield of 5% and trades at an 11.4% discount to our fair value estimate of $27.
Canadian Imperial Bank of Commerce remains on the list from last month. The stock offers a dividend yield of 4.6% and trades at a 17.4% discount to our fair value estimate of $108.
Cenovus Energy Inc. remains on the list from last month. The stock offers a dividend yield of 4.2% and trades at a 35.6% discount to our fair value estimate of $39.
IGM Financial Inc. remains on the list from last month. The stock offers a dividend yield of 5.1% and trades at a 9.2% discount to our fair value estimate of $49.
Potash Corp. of Saskatchewan Inc. remains on the list from last month. The stock offers a dividend yield of 3.6% and trades at a 10.6% discount to our fair value estimate of $52.
Rogers Communications Inc. remains on the list from last month. The stock offers a dividend yield of 4.3% and trades at a 6.4% discount to our fair value estimate of $48.
TransCanada Corp. was added to the list this month. The stock offers a dividend yield of 3.3% and trades at a 1% discount to our fair value estimate of $58.
