Canadian Stocks Fall, led by Valeant Pharmaceuticals

The TSX starts the week in the red.

| More on:
The Motley Fool
You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Unlike our neighbors to the south, the S&P/TSX Composite Index (INDEX:^GSPTSE) was unable to muster enough of a late-day rally to finish the day in the green.  The Canadian market closed down 40.6 points or -0.3% to start off this first week of June.  Sort of appropriate given that’s about what the outdoor temperature did today as well, at least in this part of the country.

Valeant Pharmaceuticals (TSX:VRX) was the biggest drag on the Canadian index today, as the stock fell 4.9%, seemingly on no news.  Valeant has telegraphed that it’s going to issue equity to finance its recent purchase of Bausch + Lomb, and therefore, today’s sell-off could be a result of institutions shorting the stock, hoping to buy it back at a cheaper price through the equity offering.

Also falling on no apparent news was Potash (TSX:POT).  The stock was down 2.3% and was the second largest contributor to today’s decline.

On the back of a downgrade by Goldman Sachs, Canadian Natural Resources (TSX:CNQ) and its 2.2% decline was another negative contributor.  Goldman took their target from $33 to $28 due to its concerns over the price of oil that CNQ is likely to receive over the 2014/15 periods.  B.C.’s decision to decline Enbridge’s Nothern Gateway pipeline was a potential catalyst for Goldman’s move.

Finally, CP Rail’s (TSX:CP) stock fell 1.7% on Monday.  This move down was potentially the result of a container train derailment over the weekend in NW Ontario.  The stock is down even more in after-hours trade as well after Pershing Square, Bill Ackman’s firm, has disclosed its intent to sell up to 7 million of the CP shares that it owns.  CP represents 26% of Pershing Square’s combined assets and they’d like to trim this exposure.

Foolish Takeaway

Once again resource oriented stocks played a significant role in today’s market performance.  Because of their heavy-weights in the TSX, these stocks can be lethal for investors that think they are protected with an index fund or ETF linked to the S&P/TSX Composite Index.

We have prepared a Special FREE Report that will clue you into the perils of investing in this kind of product and suggests an easy to implement alternative strategy.  It’s called “5 Stocks That Should Replace Your Canadian Index Fund” and you can receive a copy at no charge – just by clicking here.

Follow us on Twitter and Facebook for the latest in Foolish investing.

Fool contributor Iain Butler is short $40 July 2013 put options on Potash and long Potash shares.  The Motley Fool doesn’t own shares in any of the companies mentioned.   

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

TSX Today
Energy Stocks

TSX Today: What to Watch for in Stocks on Thursday, August 11

Rising commodity prices could take energy and mining shares on the TSX higher at the open today.

Read more »

Supermarket aisle with empty green shopping cart

$183 for Toilet Paper and Cups: Why We Love Costco Stock

"I literally went up there to get two things."

Read more »

A worker gives a business presentation.

TFSA Investors: 2 Top Stocks to Buy Before They Rally Any Further

Although plenty of top Canadian stocks have been rallying recently, these two still offer great value and are perfect for…

Read more »

growing plant shoots on stacked coins
Stocks for Beginners

3 TSX Stocks With High Dividend Yields

Are you looking for a great opportunity to bolster your portfolio? Here are three TSX stocks with high dividend yields.

Read more »

financial freedom sign
Stocks for Beginners

1st-Time Investors: 2 Cheap Canadian ETFs to Buy for Financial Freedom 

Investing for the first time but don’t know where to start? Here are two cheap Canadian ETFs that can grow…

Read more »

Money growing in soil , Business success concept.
Dividend Stocks

Got $4,000? 4 Simple TSX Stocks to Buy Right Now

The macroeconomic environment is tense but investing can be simple. Here are four stocks to buy now and book your…

Read more »

Oil pumps against sunset
Energy Stocks

2 Top Canadian Energy Stocks to Buy Offering Dividend Yields Above 6%

These two top Canadian energy stocks are excellent long-term investments and offer unbelievable dividend yields if you buy them today.

Read more »

Target. Stand out from the crowd

4 TSX Stocks I Own and Will Buy More of if They Fall

These are my four top choices of TSX stocks that may dip in the future, but will pay me back…

Read more »