Industrial Alliance With stocks of Canadian energy services and diversified energy companies “ending the year on a high note,” Industrial Alliance Securities analyst Elias Foscolos warns investors to be more selective heading into 2021.
Buoyed by both rising oil prices and the start of distribution of the COVID-19 vaccine, five of the nine companies in the analyst’s coverage universe have posted returns of over 40 per cent thus far in the fourth quarter with valuations now converging near historical averages.
“Stocks returns in our coverage universe have been very strong quarter-to-date, exhibiting high beta to the broad market recovery. Names with greater leverage (excluding PSI) and exposure to CAPEX and drilling in the E&P sector have posted the strongest returns, with SES, SCL, and CEU leading the way,” he said. “Although TEV shares these characteristics, it has been one of our bottom performers in Q4/20. TEV refinanced its debt in the quarter, which had been the Company’s primary uncertainty in our view, but at an interest rate that investors were likely not expecting. MTL’s stock has continued to experience positive momentum, spurred by another quarter of strong financial results, and currently leads our coverage universe in price return year-to-date. BAD and CMG have been essentially flat quarter-to-date.”