Over the past week, the top analysts issued or reiterated thirty buy recommendations on Canadian stocks, with target prices that imply an upside potential greater than 25 per cent over the next 12-months. Warning label: the gains could take longer to show up if a substantial recession occurs in 2022, a risk that some top-down analysts say cannot be easily dismissed.
Stocks recommended by 5-star analysts (sorted by upside potential)
| COMPANY | | ANALYST | BROKERAGE |
| Akumin Inc | AKU-T | Noel Atkinson | Clarus Securities |
| Data Comm Management | DCM-T | Noel Atkinson | Clarus Securities |
| Enerflex | EFX-T | John Gibson | BMO Capital |
| VerticalScope | FORA-T | Drew Mcreynolds | RBC Capital |
| Total Energy Services | TOT-T | Cole Pereira | Stifel Nicolaus |
| Ether Capital | ETHC-NE | Bill Papanastasiou | Stifel Nicolaus |
| Copperleaf Tech | CPLF-T | Robert Young | Canaccord Genuity |
| Rubellite Energy | RBY-T | Mike Murphy | BMO Capital |
| Headwater Exploration | HWX-T | Luke Davis | RBC Capital |
| Dexterra Group | DXT-T | Michael Doumet | Scotiabank |
| CES Energy Solutions | CEU-T | John Gibson | BMO Capital |
| CES Energy Solutions | CEU-T | Cole Pereira | Stifel Nicolaus |
| Cronos Group | CRON-T | Matt Bottomley | Canaccord Genuity |
| Fortuna Silver Mines | FVI-T | Dalton Baretto | Canaccord Genuity |
| Wheaton Precious Metals | WPM-T | Carey MacRury | Canaccord Genuity |
| Propel Holdings | PRL-T | Phil Hardie | Scotiabank |
| Peyto Exploration & Dev | PEY-T | Dan Payne | National Bank |
| goeasy | GSY-T | Mario Mendonca | TD Securities |
| Savaria | SIS-T | Michael Doumet | Scotiabank |
| Minto Apartment REIT | MI-UN-T | Matt Kornack | National Bank |
| CAE Inc. | CAE-T | Fadi Chamoun | BMO Capital |
| CAE Inc. | CAE-T | Steve Arthur | RBC Capital |
| Birchcliff Energy | BIR-T | Jeremy Mccrea | Raymond James |
| Birchcliff Energy | BIR-T | Robert Fitzmartyn | Stifel Nicolaus |
| Kinaxis | KXS-T | Paul Treiber | RBC Capital |
| Bird Construction | BDT-T | Frederic Bastien | Raymond James |
| Element Fleet | EFN-T | Graham Ryding | TD Securities |
| Element Fleet | EFN-T | Jaeme Gloyn | National Bank |
| Kinaxis | KXS-T | Robert Young | Canaccord Genuity |
| InterRent REIT | IIP-UN-T | Mario Saric | Scotiabank |
| |
Source: TipRanks
When more than one 5-star analyst is bullish on a stock, it could signal that there is a greater chance the 12-month price target will be reached. In the current batch, there were five companies that had buy recommendations from two analysts: Birchcliff Energy Ltd., CAE Inc., CES Energy Solutions Corp., Element Fleet Management Corp., and Kinaxis Inc. No companies were recommended by three or more analysts.
The upside potential implicit in an analyst’s target price may be a proxy for their level of conviction. If so, the most bullish of analysts is Clarus Securities’ Noel Atkinson. His picks, Akumin Inc. and Data Communications Management Corp., are forecast to deliver the largest gains, 863 per cent and 156 per cent, respectively, over the next year. According to TipRanks.com, Mr. Atkinson’s recommendations over the past year were profitable 42.3 per cent of the time, with an average return of 18.6 per cent.
Akumin provides outpatient radiology and oncology services in the United States; the company recently replaced its chief financial officer and raised approximately US$30-million by selling a chunk of its account receivables to a third party. Brampton, Ont.-based Data Communications Management provides workflow and digital-asset services.
Enerflex Ltd., which supplies equipment to energy producers, has an upside potential of nearly 100 per cent, according to John Gibson of BMO Capital. Mr. Gibson’s selections during the past year have made money 61.5 per cent of the time, scoring an average annual return of 26.2 per cent.
Drew McReynolds of RBC Capital sees a gain of 91.5 per cent in VerticalScope Inc., which builds and operates cloud-based platforms for online communities. Mr. McReynolds has a success rate of 60 per cent for his picks, with an average gain of 9.7 per cent
There are some caveats to consider when using the TipRanks.com ratings. These caveats caution that stock picks from even the top analysts are not necessarily for immediate purchase. They are more of a screening tool to identify stocks for further investigation.
One caveat is that the 5-star ratings are based on analysts’ performance over the past year. Using TipRanks.com’s ratings for two-year periods might offer a better assessment. A second caveat: some analysts with stellar track records may have got a lift from specializing in a sector that is in a bullish upswing, such as the oil & gas industry presently.