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Jun 30, 2021

We're #28! TSX rides commodity rally to outpace Dow Industrials

Christine Poole discusses TSX Financials Index

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The commodity boom is alive and well for Canada’s top stock exchange.

The S&P/TSX Composite Index rallied 7.83 per cent in the second quarter, propelling Toronto’s benchmark into the 28th spot among 92 global peers, sandwiched between Morocco and Austria in terms of overall returns. That lags the S&P 500’s eight per cent increase, which has the U.S. benchmark ranked 24th in the world, but easily surpasses the blue-chip American benchmark Dow Jones Industrial Average’s 44th-placed showing.

The TSX Composite’s performance compared to its American peers begins to look a little better when broadened out to a year-to-date basis. Over the course of the first half of 2021, Toronto’s benchmark has outperformed the S&P 500 and the Dow, ranking 25th in the world with a 15.7 per cent return. Only a single subgroup – the materials index – is lower on a year-to-date basis.

Here’s how Bay Street booked that second-quarter return:

Top Stocks:

  • Tourmaline Oil Corp. +48.1 per cent
  • BlackBerry Ltd. +43.7 per cent
  • Enerplus Corp +41.2 per cent

Tourmaline Oil

In spite of its name, Tourmaline is primarily a natural gas play. The company, Canada’s largest natural gas producer with significant assets in the Montney and Deep Basin formations, has gotten a significant boost from the underlying strength in commodity prices. Natural gas has been buoyed by the jump in natural gas prices due to unprecedented heat in Western Canada.

BlackBerry

Call it a meme stock rally. Shares of BlackBerry have gone on a meteoric rise as Reddit-based retail investors bid up a slate of stocks, including the likes of AMC Entertainment Holdings Inc. and Gamestop Corp. BlackBerry has been reluctant to capitalize on the gains, eschewing capital-raising schemes undertaken by other companies caught up in the wave.

Enerplus

Another oil and gas play, Enerplus has gotten a boost in the wake of a rebound in energy demand as the pandemic exits its darkest period. The company has been active in decamping from Canada to the United States in order to tap into a more accommodative regulatory environment, with CEO Ian Dundas repeatedly declaring regulations south of the border to be more accommodative for his firm.

Biggest losers:

  • Westport Fuel Systems: -27.2 per cent
  • Ballard Power Systems: -26.7 per cent
  • Canopy Growth Corp: -25.7 per cent

Westport Fuel Systems

There’s been some cooling sentiment around alternative fuel vehicles after a massive rally last year in shares of companies focused on the future of transportation. Westport has been caught up in that trend, posting the biggest loss of any TSX-listed company in the most recent quarter. Shares of the firm have come under pressure amid that secular shift, leaving it as the worst performer on the TSX.

Ballard Power Systems

It’s a similar story for Ballard – a company that has been a boom and bust on public markets since the 1980s. Ballard has signed a number of deals to provide power units to public transit systems, but the widespread adoption of alternative power remains a hurdle.

Canopy Growth

It’s been a rough ride for the Canadian cannabis sector in the wake of legalization: the industry has been hampered by the combination of concerns over sustained profitability and the robustness of the legal market.

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