The Worse the Stock, The Better the Return: Canadian Edition

by: Market Blog

By David Berman

If you were dazzled by the previous blog post on how the 10 worst performing stocks in the S&P 500 during the bear market have been the best-performing stocks during the one-year stock market recovery, here’s a treat: Despite our limited number-crunching skills, we’ve taken a similar – though scaled back – approach to the S&P/TSX composite index to give a Canadian version of the story.

The bear market in Canadian stocks began later than the U.S. version. The S&P/TSX composite index began its descent into despair on June 17, 2008, so we looked at the 10 best-performing stocks and the 10 worst-performing stocks between then and the market’s bottom on March 9, 2009. Then, we looked at the respective rebounds of these same stocks.

The best group of 10 stocks in the index scored an average unweighted gain of 34.3% during the bear market, which is very good given that the index fell 49.8% over this period. Although precious metals stocks dominate the list, the names also include George Weston Ltd., Biovail Corp. (BVF) and Metro Inc. (OTCPK:MTRAF)

The worst group of 10 stocks fell an average (again, unweighted) of 86% – suggesting that investors thought these stocks were more or less dead. They include Sherritt International Corp. (OTCPK:SHERF), Precision Drilling Trust (NYSE:PDS) and Teck Resources Ltd. (TCK.B)

What’s interesting is that even though the best-performing stocks outperformed the S&P/TSX composite index during the bear market, they also outperformed the index during the market’s recovery over the past year. The 10 stocks rose an average of 69.7%, against the index’s gain of 57.5%.

But if you want to see eye-popping returns, check out the worst-performing stocks during the bear market. Though they were given up for dead during the depths of the financial crisis, these stocks didn’t die, and relieved investors rewarded their survival with a triple-digit gain of 381.1% on average.

The worst stock of the bunch - that would be Advantage Oil & Gas Ltd. - rose a cool 200%. And the best stock, Teck Resources Ltd., rose an outstanding 1003.2%.

If you’re interested, here are the raw numbers.

Best performers during bear market: Gain during bear market, gain during market rebound

Iamgold Corp (NYSE:IAG): +50.4%, +62.1%

Metro Inc.: +49.6%, +8.6%

SXC Health Solutions Corp. (SXCI): +44.1%, +144.8%

Semafo Inc. (OTCPK:SEMFF): +43.7%, +175.3%

Rubicon Minerals Corp (RBY): +34.9%, +174.1%

Alamos Gold Inc. (AGIGF.PK): +25.3%, +72.4%

George Weston Ltd.: +25.2%, +11.9%

Eldorado Gold Corp. (NYSE:EGO): +24.2%, +26.9%

Franco-Nevada Corp. (FNNVF.PK): +23.5%, +4.8%

Biovail Corp.: +22.5%, +16%

Worst performers during bear market: Loss during bear market, gain during market rebound

Advantage Oil & Gas Ltd.: -81.1%, +200%

Thompson Creek Metals Co. Inc. (TC): -82.2%, +288.9%

Quadra Mining Ltd. (OTC:QADMF): -82.7%, +372.5%

Lundin Mining Corp. (LMC): -84.3%, +314%

Trinidad Drilling Ltd. (OTCPK:TDGCF): -85.2%, +251.9%

Crew Energy Inc. (OTCPK:CWEGF): -85.9%, +430.4%

FNX Mining Company Inc. (OTC:FNXMF): -87.7%, +363.8%

Sherritt International Corp. (OTCPK:SHERF): -88.2%, +346.9%

Precision Drilling Trust: -90.5%, +239.7%

Teck Resources Ltd.: -92.5%, +1003.2%