Edmonton 'portfolio' climbs for third year
City stock index impressive as top companies enjoy banner years
Gary Lamphier, The Edmonton Journal
Published: Thursday, January 04, 2007
As reported here Saturday, the Edmonton Portfolio Index easily outpaced North America's major stock market indexes in 2006, marking the third straight year that local stocks thumped the competition.
The EPI, a basket of 40 Edmonton-area stocks and income trust units created by The Journal in 2004, gained 25.2 per cent last year, on a simple unweighted basis. The 10 largest local firms -- including players like Canadian Western Bank, Stantec, and Melcor -- gained 41 per cent.
By comparison, the S&P/TSX Composite Index, Canada's leading equity benchmark, rose just 14.5 per cent; the Dow Jones Industrial Average gained 16.3 per cent; and the Nasdaq Composite Index rose 9.5 per cent.
Impressive as those stats are, they don't fully reflect just how rapidly Edmonton's corporate sector is growing, and attracting the attention of investors and analysts across the country.
Just four years ago, the 10 top publicly traded firms in Edmonton boasted a combined market worth of just $1.9 billion. Today, the top 10 have a combined market value of nearly $7 billion -- up 263 per cent.
Meanwhile, the number of local public players has tripled to roughly 80 firms, and
there isn't a single company in the top 25 with a market cap of less than $100 million. Four years ago, just seven firms reached that level.
As the quality and size of local listings continues to improve, The Journal has continued to upgrade the quality of the index itself. This year is no different.
Five of the EPI's 40 components have been dropped for 2007, and five new names have been added. Those dropped include Ceapro, Raydan Manufacturing, Grizzly Diamonds, Dalmac Energy and NQL Energy.
All but NQL -- which is in the process of being acquired -- have been removed because they no longer meet the EPI's minimum market cap or trading volume requirements.
New members of the index include North American Energy Partners,
AutoCanada Income Fund, Liquor Barn Income Fund, Brilliant Mining, and PowerComm. The latter is about to complete its IPO (initial public offering).
The five new issues boast a combined market cap of more than $1 billion. That's roughly 20 times greater than the total market worth of the five issues that have been dropped.
Although the EPI was created simply as a tool to assess the performance of the Edmonton region's public companies, it was never meant to be a guide for real-life investors. For starters, I'm not a licensed adviser, so I'm not equipped to recommend anything. And even if I was, most local issues wouldn't have qualified as "investment grade," anyway.
But that's changing. With the growth of so many local firms in so many sectors, from retailing to manufacturing, banking and construction,
I believe it's now possible to create an "investment grade" portfolio made up largely of local stocks.
Yet, with dozens of fast-growing local firms now raising billions of dollars in equity each year, and with several major pension funds based right here, Edmonton remains the only major city in Canada without a bona fide, locally based, full-service investment dealer. Knock knock, anyone home out there?
Shares of Churchill Corp. (TSX:CUQ) continued to sizzle in active trading Wednesday on the TSX, gaining 70 cents to close at $6.80, on volume of 55,415 shares. After gaining 86 per cent in value in 2006, Churchill's stock is already up a further 13.3 per cent in the first two trading sessions of the new year.
The industrial, commercial and civil construction giant didn't have any news to announce, but investors appear to be piling into the stock on the heels of a positive report issued by Blackmont Capital analyst Avi Dalfen.
Dalfen's report, parts of which are reprinted in the current issue of Investor's Digest, rates Churchill's stock a "best buy," with a 12-month target price of $7. The shares touched the $7 level in intra-day trading Wednesday.
Churchill's shares traded in the $3 range as recently as last February.
Most economists see slower growth ahead for the U.S. -- and Canadian -- economies in 2007.
But before you go back to sleep, secure in the belief that economic Armageddon is not at hand, consider some recent comments by U.S. Comptroller General David Walker. Seems he didn't get the memo.
"The largest employer in the world announced on Dec. 15 that it lost about $450 billion (US) in fiscal 2006," said Walker, in a recent letter published in The Washington Post.
"Its auditor found that its financial statements were unreliable and that its controls were inadequate for the 10th straight year. On top of that, the entity's total liabilities and unfunded commitments rose to about $50 trillion, up from $20 trillion in just six years," he said.
"If this announcement related to a private company, the news would have been on the front page of major newspapers. Unfortunately, such was not the case -- even though the entity is the U.S. government," he added.
"The only way elected officials will be able to make the tough choices necessary to put our nation on a more prudent and sustainable long-term fiscal path is if opinion leaders state the facts and speak the truth," said Walker.
"We hope the media and other opinion leaders do their part to save the future for our children and grandchildren."
There you go now, people. Have a nice day.
[email protected]
Prev
Linear Mode
