Put these stocks on your holiday shopping list
Online shoppers may have been scouring the web in search of sales on Cyber Monday, but GMP Securities marked the occasion by pointing investors to a different source of potential deals: the hurting stock market.
The Toronto-based equity research firm and investment bank issued a shopping list of 13 stocks that have faced much heavier losses — greater than or equal to 30 per cent — than the markets as a whole.
All of the stocks are projected to see 15 per cent growth in 2019 in either earnings per share, EBITDA or cash flow per share. They also each have a valuation at the low end of historical ranges for 2019.
“Market corrections create opportunities for investors who are prepared to go against the crowd and act boldly,” the report said. “We expect the names on this list to exhibit above-market volatility and offer the potential to outperform significantly in a market rally.” At the top of the shopping list is Curaleaf Holdings. GMP is projecting that the Massachusetts-based cannabis company will see its share price shoot up to $20 from $8.24 — a 142 per cent increase. The stock, which began trading Oct. 29 after a reverse takeover on the CSE, hit a high of $11.49 in early November.
While another cannabis company, Moncton, N.B.based OrganiGram Holdings, also appears on GMP’s list, they’re more bullish on Curaleaf because it is expanding operations in the U.S.
Curaleaf, according to GMP, now has 17 dispensaries in Florida and has seen 143 per cent growth to its network in the state since the second quarter of 2018, far surpassing the investment bank’s projections. This is significant, the report notes, because more than 25 per cent of Curaleaf ’s sales come from Florida.
There may be more good news to come for the company as well, given that it has already opened two dispensaries in Massachusetts and GMP expects more are on the way. New Jersey, meanwhile, was set to vote on a cannabis legalization bill Monday, giving Curaleaf even further potential to expand. A potential New Jersey market, which could be established by the end of 2018, hasn’t even been included in GMP’s forecasts yet.
“With a full pipeline of catalysts ahead, and relatively low valuation providing an attractive entry point, Curaleaf is our top pick going into the holiday season,” the report said.
Like cannabis, the mining sector has been beleaguered by volatility — but GMP is projecting 116 per cent and 136 per cent growth respectively for First
Quantum Minerals Ltd. and Leagold Mining Corp.
Vancouver-based First Quantum, which has seen its stock decline 43 per cent since reaching a 52-week high in June, is GMP’s bet on a rally in copper prices. The investment bank believes copper, which closed at US$2.82 on Friday, will soon grow to above US$3 per pound due to the increasing push into renewable energy and electric vehicles.
The company’s Cobre Panama open-pit mine, GMP said, is expecting its first ore in the first quarter of 2019. Once it’s in production, the mine could give the company a significant shares of the copper market. GMP expects First Quantum to be producing 4.5 per cent of the world’s mined copper supply by 2021. As a result, it sees First Quantum’s share price rising to $27 from $12.45.
Like First Quantum, Leagold’s ongoing projects should also leave investors with a positive outlook, GMP said. Leagold, which has seen a 46 per cent decline since also reaching a 52-week high in June, is in “the enviable position of having to choose between two attractive, short-cycle projects,” GMP said. Leagold, which has two mines — Los Filos and Bermejal — in Mexico, has completed the prep work for its expansion of the Bermejal underground mine, GMP said.
The company is also looking to restart a Brazilian mine, Santa Luz, and has completed a feasibility study for the project. Before the end of the year, the company’s board will decide on which project to target first. Leagold’s potential for growth, the best of any junior producer, according to GMP, has convinced the investment bank to raise its target price to $3.50 from $3. The stock closed at $1.48 on Friday.
Investors should also consider buying low on energy stocks that include Kelt Exploration Ltd., Horizon North Logistics Inc. and Parex Resources Inc., the report said. In the tech sector, the investment bank selected Altus Group Ltd., Kinaxis Inc. and ATS Automation Tooling Systems Inc. Car dealership AutoCanada Inc., wheelchair lift manufacturer
Savaria Corporation and IPL Plastics
Inc. round out the list.
GMP is projecting between 32 and 95 per cent growth for each of these firms.