Getty Images/iStockphoto
Five analysts from Toronto-based investment bank M Partners have each named their top pick for 2014 from their respective universe of coverage.
They're a diverse mix of mid-cap industrials, mining, non-bank financials, oil & gas, and real estate.
Counsel Corp.
Analyst Patrick Ruiz likes this lender's "exceptional" growth profile, which is driven by solid production from its residential mortgage business. He expects renewals to support his growth forecasts, driving mortgages under administration higher while boosting margins. "While CXS was our top performer for 2013 and returned 164 per cent, we continue to believe there remains more upside for the stock." His one year price target of $3.25 implies a return of 31 per cent.
Enterprise Group
Recent acquisitions, along with investments in new and legacy businesses, are expected to drive this stock higher in 2014, says analyst Tom Varesh. These acquisitions and investments are expected to add $57.9-million in revenue, $24.2-million in EBITDA and $0.10 in fully diluted EPS in 2014. Mr. Varesh believes this equates to $1.20 in value, none of which is being recognized in its current $0.74 stock price. His price target is $2.24.
Lake Shore Gold Corp.
Lake Shore Gold Corp has improved its operations and the company is likely to generate free cash flow in 2014 at current gold prices, says analyst Derek Macpherson. This will allow the company to position itself to de-risk the balance sheet and improve investor confidence throughout the year. He believes this is likely to lead to a re-rating that should see Lake Shore trade in line with or at a premium to peers. It currently trades at 4.0x 2014 EBITDA versus peers at 6.0x. Mr. Macpherson has a price target of $0.95.
Mainstreet Equity Corp.
Analyst Brendon Abrams believes this real estate company with a long track record of generating strong returns for shareholders is among the REITs/REOCs best positioned given its ability to generate organic net operating income growth and to grow through acquisition without issuing equity. Mr. Abrams says this is attributable to the company's exposure to strong rental markets in Western Canada (led by Edmonton and Calgary), stabilization of units (approximately 22 per cent of the company's portfolio), and acquisition capacity of up to $175-million (based on 60 per cent LTV). He has a price target of $43.50.
TAG Oil Ltd.
Having established a cash-flowing production base in New Zealand's Taranaki Basin, TAG has begun to deploy that cash into higher impact plays hosting considerable upside potential, explains analyst David Buma. He says key programs in H1/14 include the drilling of multiple deep gas prospects in the Taranaki and the first steps in de-risking the enormous unconventional resource potential within the East Coast Basin. With a solid balance sheet, the company's work program is funded over the next 12 months. Mr. Buma has a price target of $8.00.