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The TSX Composite Index was bleeding red on Sept. 26, falling 1.2 per cent to 19,556.15 and flirting with the year’s low reached in June.
Following a flat Monday, the TSX picked up where it left off last week when it closed down 3.5 per cent after being roiled by the U.S. Federal Reserve, which said it expected higher interest rates to stick around as the U.S. economy continued to resist the full weight of hikes.
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All the TSX’s sectors pulled back. The materials and utilities sectors fell 1.9 per cent followed by information technology down 1.7 per cent, financials at 1.1 per cent, consumer staples at 0.3 per cent, and energy, 0.2 per cent.
On a day of red, only 22 stocks closed up versus 204 decliners.
Here are the TSX’s top three performers for Sept. 26.
MEG Energy Corp.
One-day change: 4.09 per cent
Year-to-date change: 36.4 per cent
The energy sector has been keeping the TSX aloft this year as oil prices continue to surge with West Texas Intermediate (WTI) up 12.6 per cent year to date.
Oilsands producer and exploration company MEG Energy got a boost from ratings agency Fitch, which recently upgraded it on expectations for ongoing debt reduction and “abundant” cash flow.
“MEG’s rating reflects its improving credit metrics, material gross debt reduction and improved visibility on additional debt reductions over the next few quarters, below-average refinancing risk with no bond maturities until 2027 and abundant liquidity,” Fitch said.
Of the 13 analysts who cover the company, seven have a “buy” rating on the stock and six a “hold,” with a 12-month consensus target price of $27.75, according to Bloomberg.
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MEG Energy closed at $25.70.
West Fraser Timber Co. Ltd.
One-day change: 2.41 per cent
Year-to-date change: -0.04 per cent
Pulp and paper company West Fraser announced a deal that caught analysts’ attention.
The Vancouver-based company said Sept. 22 it signed a deal to sell two pulp mills in Western Canada to Atlas Holdings for US$120 million.
“We view this as positive for WFG,” said BMO Capital Markets analyst Ketan Mamtora in a note published on Sept. 25, adding that the deal “significantly reduces (the company’s) exposure to pulp — a segment where it has struggled in recent years.”
Of the six analysts covering the company, five have “buy” rating and one has a “hold.” The 12-month consensus target price is $144.50.
West Fraser closed at $97.73.
Canadian Natural Resources Ltd.
One-day change: 2.36 per cent
Year-to-date change: 15.9 per cent
Canadian Natural has a WTI break-even price of US$40 per barrel.
Given that, Bloomberg analysts said in a research note that the Calgary-based oil and natural gas producer “holds a significant long-term advantage that will drive free cash flow.”
Bloomberg estimates fresh-cash generation could hit $8.7 billion in 2023.
Of the 23 analysts covering the company, 15 have “buy” ratings and eight have “holds.” The 12-month consensus target price is $93.01.
Canadian Natural closed at 87.11.
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• Email: gmvsuhanic@postmedia.com
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