A funny thing happened while you were dumping your account statements directly into the trashcan and giving your broker the silent treatment: Sure the market is moving sideways, but within that busy shuffle some names are thriving and making investors money.
Steel yourself and have a look at the 52-week-high list. Yes, there are a few gold stocks on it since gold is on a tear. But there are others too. Let’s start with Ruggedcom. That’s not an arbitrary choice: It was recommended by yours truly last June, and when I get a rare opportunity to brag, I take it.
The company makes nearly indestructible routers used in electrical grids. The stock was $14 then. It was a lot cheaper a couple of months later. But it’s up 30 per cent since being touted. The idea came from Michael Urlocker at GMP Securities, who made a convincing case. He still likes the stock.
Next on the list is Fairfax Financial Holdings, the insurance conglomerate that deftly sidestepped the worst of the credit crisis and market rout. The company has, or had, a lot of critics, some of whom convinced me that they were right, which made me wrong, especially more recently. But they’re gradually being silenced. The shares sell for 11 times earnings and the property and casualty insurance business appears to be firming up.
Food is a hot seller on the stock market. Empire, which owns Sobeys and IGA, is touching 52-week highs. So is Weston, which owns a lot of Loblaw. It’s not that business is hot though. It’s more the “defensive” nature of the industry, which attracts institutional investors who need to own equities.
You wouldn’t think technology stocks would do well in this environment. Cisco‘s hurting, and so are Intel and Microsoft. But there are pockets of joy. Calian Technologies is a technology service concern with lots of government business – 60 per cent to be exact. The company just posted a very strong first quarter, is buying back stock and pays a dividend, with a nearly 5-per-cent yield.
Open Text is also prospering, as are its shareholders. The company is on an impressive winning streak and analysts by and large think it can go on. Open Text makes software used to manage information and spur productivity and/or cut costs. The company’s shares are up 30 per cent year over year.
Keyera Facilities Income Fund isn’t hitting highs but it’s not hitting lows either. The units are roughly flat year over year but investors have earned the yield of about 10 per cent. Keyera runs plants for the gas industry – it’s in the so-called midstream of the business – and is less affected by commodity prices than producers.
Winpak, maker of those little plastic coffee creamer cups, has been on a tear since it bottomed at $4 in the summer. Is cheaper coffee in vogue, meaning more demand for disposable creamers? Maybe, but the fall in the loonie probably has more to do with it.
Some U.S. shares are also doing well. You hear a lot about “recession-proof” businesses, but few truly are. One thing that does do well in a recession is educational enrolment. Some postsecondary institutions in the States are publicly traded, including Devry, up about 10 per cent in the past year, and ITT Educational, up 40 per cent. Both stocks have rich price-earnings ratios, which tells you that investors expect good news.
Brink’s Home Security is also touching new highs. Maybe crime goes up in a recession. Refiner stocks, as I mentioned recently, are also on the move as their margins improve.
And on and on it goes. How well these names do from here on is hard to say. But the point is that this is not the time to turn your back on your portfolio and wait until the next bull market. Newsflash: Investing is hard. Put in the time and don’t get discouraged because you’re down by a half.
(RCM-TSX)
Yesterday’s close $17.75, up 10¢
(FHH-TSX)
Yesterday’s close $396.99, up $1.49
THE GLOBE AND MAIL // SOURCE THOMSON DATASTREAM
Fabrice Taylor is a chartered financial analyst.
ftaylor@globeandmail.com
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Tags: calian, cisco, empire, fairfax, gmp securities, income fund, intel, keyera, loblaw, market, michael urlocker, microsoft, ruggedcom