Looking at a chart of the TSX, which is laden with resource stocks, it appears that the bottom has been put in and 2014 will be a year of recovery. There also many analysts which think that this year will be a rebound year for many junior resource stocks. As these are cyclical stocks and we have been in bear market for the last couple of years I am looking for a recovery.
If a recovery in fact appears and these resource stocks move higher a company like Canaccord will benefit as a big part of their business is geared towards doing financings and providing advisory services to these type of companies. This could be a more conservative way to play an upturn in the capital markets in Canada as the company is debt free, has $300 million in cash, and has assets under management growing. In addition the company has been buying back stock along with paying a dividend that is around 2.5%.
The company last week came out with earnings that exceeded expectations. Here is the link. Peter Hodson, who used to work at Sprott Asset Management and is now the proprietor of 5i Research was on BNN last week and had Canaccord as one of his top picks.
I will be looking buy next week on any weakness.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CCORF over the next 72 hours.