skip to Main Content
Get your free newsletter: Actionable insight each morning for self-directed investors. 
Home » Popular Markets » Equities » Five interesting Canadian stocks to keep an eye on in May

While we publish a regular pick list here on The Armchair Trader, there are also a lot of other stocks we keep tabs on, with a view to potentially adding them. Obviously the bulk of them don’t end up qualifying, but our screens keep throwing up some interesting ideas. We also look outside the core UK and US markets for investment ideas. This week we thought we’d take a closer look at Canada.

Western Forest Products (WEF)

We always feel that Canadian forestry products companies seem to get overshadowed by their cousins in the mining sector, but we are seeing some very high quality stocks in this space right now. This is a softwood products mid-cap which is heavily engaged in the lumber space, especially in areas like outdoor timber – e.g. decking – as well as interior living. It also provides more heavy-weight industrial timber – e.g. rail sleepers. Revenues have now passed pre-pandemic levels. The company still looks pretty cheap, at 5.4x 12 month forecast rolling basis. Shares are currently well off their 52 week high but they put on more than 9% in the last month.

Stelco Holdings (STLC)

We keep touting the steel sector on this site, but whichever market we look at right now we keep seeing steel companies doing well. Stelco Holdings Inc is a producer of flat-rolled steels, including coated, cold-rolled and pig iron products among others. Shares hit a recent high around 57 cents but have come off slightly since then. They are still very cheaply priced, down 5.26% over the last 30 days, but up 26% over three months. Revenues and net income are increasingly steadily. RBC just raised its target price on Stelco to C$61 while JP Morgan has raised it C$67. Of seven brokers covering the stock, we have a consensus buy rating in place.

Lundin Mining (LUN)

Well it IS a Canadian stocks review, so it is inevitable that we come to the mining stocks. Lundin Mining has dropped in price in recent days and is well off its 52 week high. Volumes are also down. The £5.38bn market cap Lundin is a diversified base metals miner with operations all over the world, mainly in the areas of zinc, gold and nickel. Lundin reported quarterly adjusted earnings 28 April of 40 cents per share with the mean expectation of the 15 analysts covering the stock of 33 cents per share. Revenue is up 45.5% to C$991m from a year ago, again beating analysts’ estimates. The mean earnings estimate has risen 17% in the last three months.

Torex Gold Resources (TXG)

As with Lundin Mining above, Torex Gold Resources has seen its stock sold off in the big natural resources stampede of April 2022 which just seems to be creating some excellent value opportunities in the space. Torex Gold is an intermediate gold producer which is focused on the exploration, development and operation of the Morelos Gold property (29,000 hectares) in Mexico’s Guerrero Gold Belt. Its big asset is the El Limon Guajes mining complex. The sell-off has made this miner look a lot cheaper, given its solid financials. It has US$256m cash, net debt of $252m and $905m net fixed assets. April 12 it reported to investors Q1 gold production of 112k ounces of gold produced, and 108k ounces sold. Q1 financials are out 11 May.

China Gold International Resources (CGG)

Staying on the gold mining theme, we have China Gold International Resources, which has shown some impressive share price performance in Q1 and hardly suffered a blip when other miners were seeing some sell off. It is still cheap with its forecast PE still under 5.5x. It returned 17% in the last month, 47% in the last three months. The stock is still 12% off its 52 week high despite this rally. The company, which has two producing gold mines, one in Inner Mongolia and one in Tibet, has massively increased revenues in 2021, which was its best year yet for income. China Gold International is not covered by the big Canadian brokers and consequently we are seeing little institutional interest in the company. There is still a lot of debt on the books ($765m), so we will have to see how that shakes out going forward.

Related

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

Stocks in Focus

Here are some of the smaller companies we are following most closely. They all represent significant growth stories in our view. Our in-depth reports go into more detail on why we like them.

Comments

Subscribe for more stories like this, 8am weekdays - for free!


Get your free daily newsletter: 

Thanks to our Partners

Our partners are established, regulated businesses and we are grateful for their support.

Pepperstone
FP Markets
IG
Spreadex
WisdomTree
ActivTrades
Back To Top