The bull market remained solidly in place last month with the S&P/TSX Composite Index surging an astounding 4.79 per cent in August.
This market strength was broad-based, led by materials, health care, technology, communication services, financials, energy and real estate with price returns of 15.75 per cent, 8.99 per cent, 6.17 per cent, 4.36 per cent, 4.13 per cent, 3.58 per cent and 3.45 per cent, respectively.
Only three sectors realized losses last month; however, the declines were quite modest. The industrials, utilities and consumer staples sectors reported negative price returns of 0.13 per cent, 0.38 per cent and 0.77 per cent, respectively.
The S&P/TSX Composite Index closed out the month with a year-to-date gain of 15.51 per cent.
The top 10 performers in the TSX Index during the month were:
SSR Mining Inc. (SSRM-T), rallying 60 per centEquinox Gold Corp. (EQX-T), up 42 per centNew Gold Inc. (NGD-T), up 40 per centIAMGOLD Corp. (IMG-T), up 37 per centOceanaGold Corp. (OGC-T), up 33 per centLundin Gold Inc. (LUG-T), up 32 per centNovaGold Resources Inc. (NG-T), up 31 per centKinross Gold Corp. (K-T), up 30 per centHudbay Minerals Inc. (HBM-T), up 28 per centG Mining Venture Corp. (GMIN-T), up 27 per cent
Stocks with the largest positive changes to their average target prices over the past month include:
Shopify Inc. (SHOP-T), up 35 per centMDA Space Ltd. (MDA-T), up 33 per centBRP Inc. (DOO-T), up 24 per centLightspeed Commerce Inc. (LSPD-T), up 16 per centGildan Activewear Inc. (GIL-T), up 15 per centBombardier Inc. (BBD-B-T), up 14 per centLinamar Corp. (LNR-T), up 14 per cent
Stocks with the largest negative revisions to their target prices over the past month include:
EQB Inc. (EQB-T), down 10 per centGeorge Weston Ltd. (WN-T), down 7 per centMetro Inc. (MRU-T), down 6 per centBird Construction Inc. (BDT-T), down 6 per centSeabridge Gold Inc. (SEA-T), down 6 per centLoblaw Co. Ltd. (L-T), down 5 per cent
As of Sept. 2, the S&P/TSX Composite Index was trading at a price-to-earnings multiple of 16.5 times the forward 12-month consensus earnings estimate, according to Bloomberg. Earnings estimates have increased 3.8 per cent over the past four weeks. Over the next 12 months, earnings growth is now forecast to be 9.4 per cent.
September is historically a challenging month for equity investors. In four of the past five years, the S&P/TSX Composite Index has posted losses. The TSX Index rallied 2.8 per cent in Sept. 2024, declined 3.7 per cent in 2023, fell 4.59 per cent in 2022, declined 2.49 per cent in 2021 and dropped 2.38 per cent in 2020. In September, the S&P/TSX Composite Index posted losses in 10 of the past 20 years.
Now, here’s a look at analysts’ current target prices, recommendations, forecast returns and yields for all 211 securities in the S&P/TSX 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. Data is as of Sept. 2.
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.