MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING WEDNESDAY, DECEMBER 31, 1997 (1)
Friday, January 2, 1998
Dow makes it a hat trick - The Financial Post
U.S. stocks were mixed on the last day of 1997 as the Dow capped its best three-year run since the 1930s. The Toronto market ended the year on a positive note. The Dow Jones industrial average fell 7.72 points to 7908.25 on Wednesday, cutting its gain for the year to 1,459 points or 23%. It was the third straight year the average rose more than 20%, a first for the 101-year-old average. Stock markets were closed New Year's Day.
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The Standard & Poor's 500 composite index fell 0.41 of a point to 970.43, closing the year with a 31% gain. The Nasdaq composite index rose 5.32 points, or 0.3%, to 1570.35, up 22% for the year.
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Advancing stocks outnumbered decliners nine to five on the New York Stock Exchange. About 472.9 million shares changed hands, compared with 448.7 million shares traded on Tuesday.
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The Toronto Stock Exchange 300 composite index rose 8.23 points to 6699.44 on Wednesday to close the year 13% higher. About 58 million shares traded, almost unchanged from Tuesday. Advancers outpaced declining issues, 669 to 326. The rise was led by investors seeking safety in companies not exposed to commodity prices.
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Canadian Pacific Ltd. (CP/TSE) rose 40› to $38.50, Northern Telecom Ltd. (NTL/TSE) gained 85› to $127.15, TransCanada PipeLines Ltd. (TRP/TSE) rose 50› to $31.90, and Newbridge Networks Corp. (NNC/TSE) rose 75› to $50.05 to pace the advance. Philip Services Corp. (PHV/TSE) jumped $1.45 to $20.70 and Loewen Group Inc. (LWN/TSE) rose $1.45 to $36.80.
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Seagram Co. Ltd. (VO/TSE) did not fare as well. The Montreal-based liquor distiller and entertainment company's stock declined 15% last year, although it closed Wednesday up 35› at $46.25. Nickel producer Inco Ltd. (N/TSE), which fell 45› to $24.30, dropped 44% in 1997, sent reeling by the waning demand from Asia.
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Bank stocks also lost ground. Royal Bank of Canada (RY/TSE) dropped 25› to $75.60, Canadian Imperial Bank of Commerce (CM/TSE) fell 45› to $44.60 and Bank of Montreal (BMO/TSE) dropped 15› to $63.35. Bank of Nova Scotia (BNS/TSE) defied the trend, climbing 60› to $67.35. Canada's six major commercial banks agreed on Wednesday to roll over an estimated US$1.4 billion of South Korean loans to prevent companies from
defaulting.
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Other Canadian markets closed mixed.
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The Montreal Exchange portfolio fell 7.44 points, or 0.2%, to 3404.46, a 15% rise on the year.
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The Vancouver Stock Exchange rose 8.17 points, or 1.3%, to 618.48, a drop of 48% on the year.
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The major overseas markets closed mixed.
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London: Britain's leading stock index capped a sparkling year in dull fashion, but kept intact a 25% annual advance. The FT-SE 100 index closed at 5135.5, up 3.2 points.
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Frankfurt: The German market was closed on Wednesday. On Tuesday, the Dax index ended at 4249.69, up 52.32 or 1.3% -- a 47% increase for the year.
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Tokyo: The Japanese market was closed Wednesday. On Tuesday the 225 share Nikkei average closed 483.52 points, or 3.3%, higher at 15,258.74. The average fell 21.1% for the year.
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Hong Kong: Hong Kong stocks closed down on profit-taking and futures related activity. The Hang Seng index lost 32.45 points, or 0.3%, to close at 10,722.76, down 20.3% for the year.
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Sydney: The Australian stock market closed for the year at a nine-week high. The all ordinaries index rose 15.1 points, or 0.6%, to close at 2616.5, up 8% for the year.
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HOT STOCKS - The Financial Post
TRANSCANADA PIPELINES LTD. (TRP/TSE), up 50› to $31.90, on volume of 448,998 shares. Investors took a shine to Trans Canada, making it one of Wednesday's top gainers. "Money will probably continue to go into dividend payers -- pipelines, banks and utilities -- not because the outlook is so wonderful, but because the [resource stocks] are so weak," Jack Cook, vice-president and portfolio manager at Scotia Investment Management Ltd. told Bloomberg.
ALCAN ALUMINUM LTD. (AL/TSE), up 5› to $39.40, on volume of 280,775 shares. The integrated aluminum producer cut its ingot transaction price by 4› to 80› a pound. At the same time it cut its extrusion billet price by the same amount to 90› a pound.
DRECO ENERGY SERVICES LTD. (dey/TSE), up $2.20 to $48.20, on volume of 63,546 shares. For investors more interested in fat returns than being conservative, Calgary-based Dreco was a popular buy. The company manufactures and markets equipment used in the drilling and servicing of oil and gas wells.
DIMETHAID RESEARCH INC.(DMX/TSE), down 48› to $3.30, on volume of 33,150 shares. The drug company said that it will not exercise its option to buy another 5% of Oxo Chemie AG at this time. However, it said that it is in negotiations with Oxo Chemie to extend its purchase option into 1998. The Markham, Ont.-based firm already holds a 20% interest in Oxo [INTRAWEST] Chemie. Dimethaid is developing Pennsaid, an anti-inflammatory lotion for the relief of osteoarthritic pain.
INTRAWEST CORP. (ITW/TSE), up $1.70 to $25, on volume of 6,421 shares. The Caisse de D‚pot et Placement du Qu‚bec lifted its stake in Vancouver based Intrawest to 9.9%. The Caisse now holds more than 3.4 million shares in the high-flying ski-resort developer.
PHILIP SERVICES CORP. (PHV/TSE), up $1.45 to $20.70, on volume of 168,556 shares, and (PHV/NYSE), up US$1 to US$14 3/8, on volume of 391,500 shares. Deutsche Morgan Grenfell crossed a block of 150,000 shares in New York at US$12 3/4 each. The Hamilton, Ont.-based waste management and environmental services company continued a rebound that began just before Christmas when it announced that the integration of recent acquisitions was proceeding well.
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BUY AND SELL - The Financial Post - Sonita Horvitch
Some good buys in tech stocks
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Roger Dent, director of the knowledge industries research group at
Yorkton Securities Inc., is finding selective opportunities in the
beaten down high-technology area. There has been a flight to larger, more liquid names, said Dent. Also, some stocks were trading at very high multiples and there has been a correction in valuations. Furthermore, earnings disappointments caused a pullback in some of the stocks. "The sum of all these events has opened up some buying opportunities," said Dent. Yorkton's Toronto-based knowledge group specializes in Canadian technology, biotechnology, entertainment and advanced manufacturing companies. Dent noted that the biotechnology sector does not necessarily move with the overall market. "These stocks tend to be event-driven -- good news pertaining to either the stock or the sector."
Dent's top stock pick in the segment is:
* Draxis Health Inc. (DAX/TSE) which closed recently at $4.40 and has a 52-week trading range of $5.40 to $2.75. The Toronto-based company develops pharmaceutical products. It recently completed a worldwide alliance with giant drug company Pfizer Inc. with respect to Draxis's Anipryl product for canine Cushing's disease and canine cognitive disorders. The arrangement will result in Draxis receiving up to US$41 million in payments over time, as well as royalties based on Pfizer's worldwide sales of the drug. "This is a significant step for Draxis and the stock has not moved on the news."
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In other areas, his top picks are:
* Beamscope Canada Inc. (BSP/TSE) $11.35 ($12.05-$6.60). The Toronto-based company distributes personal computers, entertainment software and video games. "It should be a good Christmas season for video games." Another plus is that it is the distributor of ExpressVu Inc.'s dish network direct-to-home satellite television system. Recently the company and its Chilean partner, Sonda SA, agreed to buy 50% of Brazil's Officer Distribuidora SA to expand their South American business. Brazil is a huge market for computers and related products. Beamscope and Sonda already operate in Chile and Argentina. The stock trades at 12 times Yorkton's expected earnings per share for fiscal 1998, ending March, of 90›.
* Rand A Technology Corp. (RND/TSE) $21 ($25-$16.25). The Toronto-based company provides computer-aided design, manufacturing and engineering solutions to corporate customers. "It has an excellent earnings growth record and there is no reason to expect this growth to abate," Dent said. The stock is significantly down from its 52-week high. Yorkton expects the company to produce earnings per share of 81› in 1997 and $1.15 in 1998. The firm's 12- to 18-month price target on the stock is $29. "It is a good quality growth company and it is rare to find it at this valuation."
* Com Dev International Ltd. (CDV/TSE) $30.50 ($40.25-$11.75). Based in Cambridge, Ont., the company makes space and ground-based wireless communications products and subsystems. Its space group's products are sold to major contractors for commercial communications satellites. Its wireless division sells mainly to cellular and PCS wireless equipment vendors. "There is rapid growth in both these segments." Yorkton's earnings per share estimates are 86› for fiscal 1998, ending October, and $1.18 for fiscal 1999. The firm's 12-month price target on the stock is $37.
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Dent is maintaining his "sell" recommendation on Telescene Film Group Inc. (TFG/TSE) $12.50 ($13.75-$9), which produces television programs and films for worldwide distribution. It was on his sell list in this column Oct. 3, 1997, when it was trading at $12.10.
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Yorkton Securities Inc. may hold positions in the securities mentioned.
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