GOLDCORP TOPS DESJARDINS’ LIST OF LARGE CAPS LIKELY TO LEAD WAY IN 2017.

Goldcorp Inc. is Desjardins Capital Markets’ top largecap pick for 2017. Husky Energy Inc., convenience store giant Alimentation Couche-Tard Inc., Telus Corp. and Dollarama Inc. round out the list of five stocks with more than $5-billion in market capitalization that Desjardins expects to lead the pack this year, its analysts said in a note on Tuesday.

Goldcorp topped the list, Desjardins says, because “the company will be able to illustrate an attractive multi-year guidance outlook on both production and costs.”

The gold producer also has a number of “impending catalysts” that should help the stock outperform, including an update on costsavings initiatives at its Red Lake and Penasquito projects that are “due to be released any week now.”

As well, Desjardins forecasts that Goldcorp’s earnings before interest, taxes, depreciation and amortization will rise 20 per cent year-over-year. Meanwhile, Goldcorp benefits significantly from the weaker Mexican peso and higher prices for copper and zinc (from which an estimated 10 per cent of its 2016 revenue stems), the analysts added.

“One risk that could derail our re-rating thesis on Goldcorp is the potential announcement of another acquisition, which we do not believe current shareholders would easily support,” Desjardins told clients.

“In our opinion, Goldcorp could potentially be a candidate interested in acquiring Detour.”

Husky Energy was selected because it “offers investors the best free cash flow yield profile among the five oil-focused large caps, and this conclusion persists across a wide range of oil prices.”

Husky also offers a “credible pathway” of low-singledigit annualized production growth for over a decade, drive by its thermal projects in Lloydminster, Desjardins added.

Convenience store titan Alimentation Couche-Tard Inc. meanwhile “excels at what we view as one of the most challenging segments in retail, convenience and fuel.”

The Montreal-based company, which owns 12,500 gas bars and convenience stores around the globe, is now “elevating its business to the next level” by converting to Circle K as its global convenience store brand outside of Quebec.

Telus was chosen because it trades at a discount among its Canadian telecom peers despite its EBITDA and dividend growth which lead the industry, Desjardins told clients.

“Telus is one of the few companies in Canada that is actually reporting revenue growth in its wireline division. It also saw a strong wireless performance in the most recent quarter, which should support future profitability,” it said.

Discount store retailer Dollarama Inc. has a “wellhoned, and highly popular, consumer proposition” and a financial model that is “compelling and superior to that of its peer group.”

Over the next five to six years, the retail chain plans to expand its store network from 1,069 stores currently to 1,400 stores over five to six years, Desjardins adds.

As well, Desjardins expects Dollarama to decide to accept credit cards as a form of payment — a move that will likely increase average transaction size and annual spending per consumer, the note said.

“We view CY17 as a pivotal year in Dollarama’s development, both in Canada and with respect to international expansion,” as the analysts “strongly believe a concept that is as powerful (financially and with consumers) as Dollarama’s will work in other markets.”