3 Canadian Stocks Making a Comeback

What’s the secret to finding the next great comeback story in the market?

| More on:
The Motley Fool

Everybody loves a comeback.  Just ask Tiger Woods.  So in the spirit of what might be Tiger Woods’ return to the winner’s circle at a major championship in this week’s British Open, let’s have a look at a few Canadian listed stocks that have made the most dramatic comebacks thus far in 2013.

We’ll start in the energy patch.  One of the worst performers in the entire Canadian market in 2012 was Pengrowth Energy (TSX:PGF) as the stock fell 54%.  2012 however was just the culmination of a decline that had begun several years earlier as Pengrowth simply hadn’t been performing.  There was a dividend cut part way through last year and that proved to be the straw that broke the stock’s back, so to speak.

This year however it’s been a different story.  The market clearly believes in the current dividend and with a yield that currently sits at 8%, surely this has been a draw.  The company is also benefitting from a rising oil price as well as asset sales where the proceeds are set to be plowed back into the company’s Lindbergh oil sands project.  A big yield and potential for growth on the horizon has Pengrowth out of the dog house for now.

Another energy concern that had a rough 2012 was Enerplus (TSX:ERF).  The stock was down 50.1% after it too was forced to chop its dividend part way through the year.  Similar to Pengrowth, the story has turned.  Again, the market seemingly believes in the current payout, which still represents a 6%+ yield even though the stock has climbed by 32% thus far in 2013.  And the company’s portfolio of assets appears to offer reasonable growth.  Non-core assets are being pruned and the focus is squarely on the company’s acreage in the Bakken and Marcellus plays.

One more

Stepping out of the energy patch and into this country’s financial services space, we find another big dividend payer is on the comeback trail.  After sinking by 37% in 2012, AGF Financial (TSX:AGF.B) has climbed by 20% thus far in 2013.  At its lows towards the end of 2012 AGF’s stock was yielding close to 13%, a level that investors clearly couldn’t pass up.  There has been no cut to the payout and AGF has seemingly turned a corner when it comes to free cash generation.  If the company is able to continue cranking out the free cash, the stock’s current yield of close to 9% is likely to continue to attract attention.

Who’s next?     

So what’s the formula here?  We’ve got high yields that appear sustainable and a potential turn in the company’s fundamentals underway.

Perusing the list of this year’s losers we find a whole pile of mining stocks, none of which really fit this criteria.

The one name that stands out however is Atlantic Power (TSX:ATP,NYSE:AT).  Atlantic currently sports a big yield of nearly 9% even after cutting its dividend payout significantly earlier this year.  However, the potential turn around in the company’s fundamentals has yet to appear, and this is made even worse by a balance sheet that has several sizeable debt maturities coming down the pipe.  If the company is able to get its financial house in order though, in a year’s time we could very easily be talking about Atlantic Power as the comeback kid of 2014.

For those who can’t stomach the thought of putting their hard earned money into a potential comeback story, have we got the report for you.  Click here now to download “3 U.S. Stocks That Every Canadian Should Own”.  It’s FREE!  You’ll find that when you’re one of the world’s greatest business, comebacks aren’t typically required.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.

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

Fool contributor Iain Butler doesn’t own shares in any of the companies mentioned at this time.  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

dividend growth for passive income
Dividend Stocks

2 Unstoppable Dividend Stocks to Buy if There’s a Stock Market Sell-Off

These two dependable TSX dividend stocks could help you ride out any market storm with confidence and consistent passive income.

Read more »

Happy shoppers look at a cellphone.
Tech Stocks

Got $25,000? Turn it Into $250,000 of Tax-Free Income as the Loonie Rises

Shopify stock is one of the best investments for long-term growth. Let's get into why.

Read more »

Start line on the highway
Dividend Stocks

The Best Stocks to Invest $50,000 in Right Now

Looking for some of the best stocks to invest? Whether you have $50 or $50,000, this trio of options is…

Read more »

calculate and analyze stock
Dividend Stocks

2 Dividend Stocks That TFSA Investors Should Buy Now

Here's why TFSA investors should consider owning TSX dividend stocks such as CNR to generate outsized gains over the next…

Read more »

analyze data
Dividend Stocks

For $5,000 in Annual Dividends, Here’s How Many Shares of CIBC Stock You’ll Need

If you're looking for stable passive income, this dividend stock will certainly get you there.

Read more »

ETF chart stocks
Retirement

2 Ways to Make Your $7,000 TFSA Contribution Work Harder This Year

Invesco Nasdaq 100 Index ETF (TSX:QQC) and another great investment to stash in your TFSA for the long run.

Read more »

Person holding a smartphone with a stock chart on screen
Tech Stocks

The Simple Strategy That Could Turn $21,000 in a TFSA Into $100,000

Explore how a smart strategy can transform your TFSA investments from $21,000 to $100,000 in just nine years.

Read more »

chart reflected in eyeglass lenses
Tech Stocks

3 Things You Need to Know if You Buy Descartes Systems Today

Learn about Descartes Systems and three key factors that could encourage investors to buy its stock during a downturn.

Read more »