What are we looking for?
Canadian gold stocks with strong market performance in 2016 and good analyst ratings.
So far, this year has been harsh for most market sectors; however, these stocks have been the exception with the TSX global gold index up approximately 36 per cent year-to-date. Worldwide, gold is off to its best start to the year in more than 35 years. As a traditional safety play, gold has been buoyed by the rapid decline in stock markets and other commodities such as energy.
The screen
We will be using Recognia Strategy Builder to search for TSX-listed gold equities with recent strong market performance and good analyst ratings.
We begin by setting a minimum market cap threshold of $3-billion to focus on larger and more stable stocks in the market.
Next, we will look at four-week price performance, focusing on companies whose stock has risen by at least 10 per cent in the past month. Finally, we will also screen based on analyst consensus recommendations. We will pick only companies with analyst ratings of buy or strong buy.
More about Recognia
Recognia is a global leader in automated quantitative analysis and engagement solutions for retail online brokers and institutions. Recognia's product suite provides actionable trading ideas based on technical and fundamental research covering stocks, exchange-traded funds, indexes, forex, options and commodities.
What did we find?
Franco-Nevada Corp. tops our list with a $13.7-billion market cap and 19.2-per-cent return over the past four weeks. Franco-Nevada is not a traditional gold producer, but rather owns a stream of gold-related royalties that provide leverage to the price of gold. The stock achieved a new 52-week high on Feb. 23.
Royal Gold has also had a very strong 2016 with the stock price rising almost 43 per cent over the past four weeks. In early February, the company released second-quarter results that were surprisingly strong and showing a record gold output, up 74 per cent over the same period last year.
Yamana Gold is another strong performer in 2016 with its stock price up 35.4 per cent in the past month. Yamana operates gold and silver mines in Canada, Brazil, Chile and other countries. On Feb. 19, the company announced fourth-quarter results that beat analyst expectations slightly on earnings but missed on revenue.
The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Recognia Inc. in respect of the investment in financial instruments. Investors should conduct further research before investing.
Peter Ashton is vice-president of retail and self-directed investing at Recognia Inc.