We are bullish on energy and believe commodity prices will hold recent gains: Portfolio manager
Both traditional oil and gas stocks as well as Canada's mining and metals sector have benefited from a recent surge of investor interest in energy, new data from the Toronto Stock Exchange shows.
The 2023 TSX 30 list, released by the exchange on Tuesday, is a ranking of the 30 top-performing stocks over a three-year period, based on dividend-adjusted share price performance.
This year's ranking is heavily dominated by the oil and gas sector, which make up 50 per cent of the list. In the number one spot is Calgary-based Paramount Resources Ltd., which saw its share price increase by 1,913 per cent over a three-year period.
Calgary-based NuVista Energy Ltd., another oil and gas exploration and production company, came in second with a share price appreciation of 1,279 per cent.
Canada's oil and gas sector enjoyed a resurgence in 2022, as Russia's invasion of Ukraine sent commodity prices spiking and refocused investor attention on the sector.
"We believe (Canadian oil and gas companies) are seen as a source of energy security, with the ongoing energy supply issues that we're seeing globally," said Loui Anastasopoulos, CEO of the Toronto Stock Exchange, in an interview.
"Through it all, these companies have maintained strong fundamentals and are supported by robust commodity prices."
But the 2023 TSX 30 list also shows how investment capital is increasingly interested in the coming energy transition and alternative, non-fossil fuel forms of energy.
Seven of the 30 companies on this year's list are in the mining sector, something Anastasopoulos said is due to a surge of investor interest in critical minerals and metals that are expected to play a key role in the energy transition. Metals and minerals such as copper, lithium and zinc are all seeing increased demand due to their use as components in batteries, electric cars and renewable energy infrastructure.
Montreal-based Aya Gold & Silver Inc., for example, is planning to quadruple its silver production from its Moroccan mining assets to meet growing global demand for solar panels, for which silver is a key component.
The company placed 14th on this year's TSX 30 list due to its 498 per cent three-year share price appreciation.
The demand for silver is increasing. But at the end of the day, every metal that is related to this energy transition will do very well because the fundamental demand is there," said Aya CEO Benoit La Salle in an interview.
"You take a look at how many cars we have now that are electric, and this is just the beginning. The trend is not changing, and the trend is going to push the demand for these metals much higher and therefore the stocks are doing very well."
Out of the seven mining companies on the list, five are included in the S&P/TSX Battery Metals Index and five are in the newly launched S&P/TSX Energy Transition Materials Index.
Anastasopoulos said the natural resource industry is and has been a powerhouse for the Canadian economy, and he expects that will continue even as the need to reduce carbon emissions in the face of climate change forces the sector to change and adapt.
"We're very bullish on this trend continuing," he said.
"I think Canada has a really unique opportunity to be a global leader in energy transition, and the TSX will continue to be a platform that enables these listed companies and investors to capitalize on long-term growth opportunities related to energy transition."
According to the TSX, the companies featured on the 2023 top 30 list averaged 553 per cent share price appreciation over the last three years, accounting for over $120 billion of value creation.
This report by The Canadian Press was first published Sept. 12, 2023.