9 stocks lose value in September slip

Despite drop, investments remain in positive territory for the year

The Montreal Gazette portfolio suffered a slight slip in September, but it could have been worse.

It was worse, in fact, for the Toronto Stock Exchange index, which fell 3.6 per cent last month and now is down a full 7 per cent in 2015.

The 15 Quebec-based stocks that constitute the Gazette portfolio lost a combined 0.94 per cent last month. But it’s still in positive territory for the year with a return of 2.28 per cent.

“The portfolio seems to always react better in turbulent times. Resources, energy and health care are what really brought down the Canadian market. The more defensive names outperformed and that’s mostly what we have,” said longtime manager Christine Décarie of Investors Group.

Of the 15 stocks in the portfolio, nine lost value in September. The worst performer by far was clothing retailer Reitmans (Canada) Ltd., which plummeted 27 per cent.

Reitmans reported another weak quarter. Sales were down 2.1 per cent to $253 million in the three months ended Aug. 1, and it had a net loss of $200,000 compared to a profit of $9.6 million in 2014.

“It wasn’t a disastrous quarter,” Décarie said. “They’re doing more of the right things now, refocusing on existing banners. They were a bit slow in dealing with their issues but now they are. We just haven’t seen the impact yet.”

The portfolio’s top stocks last month were two that have set the pace much of the year, convenience-store chain Alimentation Couche-Tard (up another 10 per cent) and auto-parts distributor Uni-Select Inc. (up 4.5 per cent).

Uni-Select now has a market capitalization of more than $1 billion and has been included in the TSX index, significant considerations for many investors, Décarie said. Couche-Tard is benefiting from the economic rebound in the U.S. and Europe and strong gas margins, but the valuation is getting a bit stretched, in her view.

Décarie, who under the rules of the portfolio can make trades only at the end of the month, took some profits on both September standouts, selling 84 shares of UniSelect at $60.40 and 83 shares of Couche-Tard at $61.37.

With the proceeds, she added 70 shares of SNC-Lavalin Group at $37.98, 250 shares of Jean Coutu Group at $20.11 and 210 shares of Fiera Capital at $11.92.

Jean Coutu is a defensive name and has come down sharply from the $28 range in April, Décarie said. “Expectations aren’t necessarily for great growth, but in turbulent times, it’s not a bad place to park a bit of money at this point.”

SNC is always worth a look when it falls below $40, she said, and Fiera appears to have good momentum in boosting assets under management through acquisitions and organic growth.

Launched 18 years ago this month with an imaginary $100,000, the Gazette portfolio ended September worth $644,329.