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Winners
Whitecap Resources Inc. (WCP)
Investors are applauding Whitecap’s merger with fellow oil producer TORC Oil & Gas Ltd., announced Dec. 8. The deal combines two well-run companies whose production operations, in Alberta and Saskatchewan, heavily overlap, suggesting that the firms’ targeted $15 million in annual cost reduction should be easily achieved. More important is that as a larger firm, Whitecap will better attract investment capital for even further growth by acquisition, deals that are likely to also be all-share debt-free purchases like TORC and Whitecap’s recently acquired NAL Resources Management Ltd. Whitecap is also backed by deep-pocketed institutional investors. Its biggest shareholders are the Canada Pension Plan Investment Board and Manulife Financial Corp.
Cameco Corp. (CCJ)
Uranium stocks got a bounce this week from a U.S. Senate subcommittee’s approval of a bill that could see Uncle Sam spending a lot of money bulking up America’s strategic uranium reserve. Saskatoon-based Cameco is one of the few, and one of the largest, of the world’s uranium producers. Though its revenues have flat-lined for years, Cameco has been an investor favourite in 2020, its stock posting a 48 per cent gain so far this year. That sentiment is driven by expectations that nuclear energy becomes more attractive as an alternative to fossil fuels, the very hope that the U.S. senators fired up this week. But the caveat is that the bill isn’t law, and there’s no saying an incoming Democratic administration will sign it into law.
Stelco Holdings Inc. (STLC)
The Hamilton, Ont., steelmaker has struggled this year with slumping steel prices and plunge in shipments by as much as half during the summer. The stock’s rebound this week follows a stunning 50 per cent recovery in steel prices, mostly in the third quarter. There’s also an investor recognition that accounting for the drop in shipments is Stelco’s ambitious retrofitting of both its flagship steelworks in Hamilton and its more modern Nanticoke, Ont., facilities, an upgrading project that will reduce costs and increase output. Stelco has been repeatedly gratified that it has been able to sell all the steel it makes, yet frustrated that until the upgrading is completed it can’t make still more.
Losers
Oncolytics Biotech Inc. (ONCY)
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Stock in the Calgary-based cancer research firm and hedge-fund favourite tumbled this week despite the Calgary firm’s impressive string of positive clinical trial reports its has issued this year. OBI is an ultra-specialized player in the crowded world market for biotech-based therapeutics, and investors have wearied this year over its inability to stand out from the crowd. In non-pandemic times, OBI’s promising non-pathogenic compounds, which are developed to work in unison with oncological therapeutics from other biotech firms, would command more attention. For now, investors are fixated with the novel coronavirus and the scores of firms developing not only high-profile vaccines but associated treatments for COVID-19.
Canadian Solar Inc. (CSIQ)
The clean-energy firm’s growing order book this year has come with higher costs, which have shaved margins. Investors showed their impatience with weak margins this week, taming their enthusiasm for one of this year’s market darlings. Even with this week’s setback, Canadian Solar shares have gained about 70 per cent in value this year, as the Guelph-based company continues to book orders for its solar-power components and solar-system servicing contracts on six continents. With a market cap of $2.2 billion, CS is a leader in this young industry, whose prospects brightened with November election of a U.S. president with an ambitious clean-energy agenda.
Bombardier Inc. (BBD)
Bombardier is heading into what pilots call “rough air” (turbulence) as it reinvents itself as a vastly smaller enterprise than before its recent sales of its commercial aircraft and rail businesses. New CEO Éric Martel, who in coming weeks will unveil blueprints for the new standalone business-jet maker, acknowledged last week that Bombardier’s cost structure and manufacturing footprint continues to be too large for its new, much smaller revenue base. Martel also allowed that while there will be more layoffs and plant closings or sales, he himself doesn’t yet know where and when the tough medicine will be administered. Investors abhor that kind of uncertainty, and showed their distaste for it this week by selling down the stock.
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