GEX, MRY, TET, and of course TLC mentioned as buys by Malvin Spooner, vice-president at YMG Capital Management Inc. in Toronto. Actually the article lists some of his buys and sells.
Sonita Horvitch
Financial Post
The Canadian equity market should do well through year-end and into 2000 as investors begin to focus on the positive economic climate for Canada, says Malvin Spooner,
vice-president at YMG Capital Management Inc. in Toronto.
"The fears surrounding possible central bank rate hikes and the Y2K jitters should subside, when it is clear that these are unlikely to derail the ongoing bull market."
Mr. Spooner wonders why Canadians have been "divesting themselves of Canadian equities," when companies in Canada are producing better than expected earnings, economic
growth is strong and inflation benign.
"The party is not over for commodities," he says. Canadian resource companies will continue to benefit from a strong Asia. The metals and minerals sector, oil and paper and
forest products have all had stellar performances so far this year.
Mr. Spooner manages YMG Growth Fund and YMG Emerging Companies Fund. He has been taking profits in cyclical stocks that have reached his targets, such as forest
products company Tembec Inc. (TBCa/TSE), which has a recent close of $14.40 and trades in a 52-week range of $15.45 to $7.70; Alcan Aluminium Ltd. (AL/TSE) $47.95
($54.90-$34.15); and base metals miner Breakwater Resources Ltd. (BWR/TSE) $3.05 ($4.23-87½).
Mr. Spooner says that now the summer months have passed, which are traditionally slow for energy stocks, it's time to focus on the sector. The shares have not responded yet to
the strength in oil and natural gas prices in the quarter ended in September, he says.
He is emphasizing some junior oil and gas firms with strong production growth profiles:
- Tethys Energy Inc. (TET/TSE) $1.90 ($2.50-56½). The Calgary-based exploration and development firm operates in southeastern Saskatchewan, central Alberta and the
Peace River Arch area. Exploration success continues in its grassroots area of Girouxville in northwestern Alberta.
- Genesis Exploration Ltd. (GEX/TSE) $9.05 ($11-$4.10). This Calgary-based company explores for and develops oil and gas in Western Canada. It "boasts of a strong
exploration team committed to its west-central Alberta core area." Mr. Spooner says that Genesis has low finding costs. The company reported strong earnings growth in its third
quarter as a result of an 141% in production.
- Startech Energy Inc. (SEH/TSE) $7.80 ($8.90-$3.30), which is based in Calgary, has been posting "impressive production and cash flow growth," Mr. Spooner notes. Its
recent purchase of a private company strengthens its prospects in its new core area in Alberta's Peace River Arch area.
Another commodity that is showing strength is gold. Mr. Spooner expects the price of bullion to trend higher. He is reiterating his buy on Iamgold Corp. (IMG/TSE) $3.45
($5-$2.60), a selection on June 5, when the stock was trading at $2.98. "The company continues to enjoy good mining results in West Africa," where it has a stake in the Sadiola
Hill gold mine in Mali, "one of the lowest-cost gold mines in the world."
To take advantage of major pull-backs in the stocks of companies that are acknowledged leaders in their fields, Mr. Spooner bought:
- TLC The Laser Center Inc. (TLC/TSE) $23.75 ($79-$23.30), which is a major provider of laser eye surgery and is based in Mississauga, Ont.
- Cinar Corp. (CIFa/TSE) $30 ($43.50-$25.50). The Montreal-based firm produces television programs and entertainment and educational products for children and families.
He likes Mercury Scheduling Systems Inc. (MRY/VSE) 85½ ($1.86-75½). The Vancouver-based smaller-cap firm "is poised to be a leader in airline operations software." It
designs and licenses software to improve airline productivity for clients such as British Airways and Canada 3000.
Mr. Spooner has sold aerospace, transportation and leisure vehicle maker Bombardier Inc. (BBDa/TSE) $26 ($26.10-$18.05) after it reached his target. |
