Commodities Leading the Rally in Canada

by: Market Blog

By Simon Avery

Toronto’s S&P/TSX hit a 13-month intraday high for the second session in a row on Wednesday, even as U.S. markets gave up ground in the face of disappointing economic data.

The best performers on the index over the last year are oil and gas, mineral and gold stocks, with the top 10 companies up more than 300%.

The worst performers include energy trusts, telecoms and oil services companies, with the bottom 10 stocks down between 16% and 30% during the last 52 weeks.

Teck Resources, which mines copper, metallurgical coal and zinc, has emerged from a near-death experience last year to boast gains of nearly 500%. A year ago it incurred almost $10 billion in debt to buy Fording Canadian Coal Trust (FDG). Helped by rising commodity prices, the company has significantly cuts its debt load after selling non-core assets.

Pacific Rubiales Energy (OTC:PEGFF), the largest independent oil and gas exploration and production company in Colombia, has seen its stock price more than quadruple, as has Ivanhoe Mines (IVN), the mineral exploration and development company run by Robert Friedland. Ivanhoe recently signed an agreement with partner Rio Tinto (RTP) and the Mongolian government to develop a $4 billion copper and gold mine called Oyu Tolgoi.

Osisko Mining (OSKFF.PK) has made a dramatic climb since last fall to become Canada's most valuable mine developer. It recently announced financing for its Malartic project in Quebec.

On the down side, Capital Power Income is a limited partnership that owns and operates power plans generating electricity from steam. The shares have lost more value than any other stock on the S&P/TSX, down 30%. Precision Drilling Trust (NYSE:PDS), which provides platforms and other services to the oil and gas industry is down nearly as much.

BCE Inc. (NYSE:BCE), the country’s biggest phone company, saw its valuation hammered last fall after its leveraged buyout attempt collapsed. For the last 52 weeks, the stock is down 28%. And Manitoba Telecom (OTCPK:MOBAF), struggling with falling revenue from businesses and land line residential customers, is worth 27% less. Harvest Energy Trust (HTE), which has exposure to oil and gas production and refining and marketing in Newfoundland and Labrador, is down 25%.