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

Daffodils in bloom
Tech Stocks

2 Best “Magnificent Seven” Stocks to Buy in April

Two surging mega-cap tech stocks are the best buys among the “Magnificent Seven” this April.

Read more »

A golden egg in a nest
Stocks for Beginners

Got $5,000? 5 Stocks to Buy for Lasting Wealth

Got $5,000 to build a long-term compounding stock portfolio? Here are five top Canadian stocks to building lasting lifetime wealth.

Read more »

Businessman looking at a red arrow crashing through the floor
Dividend Stocks

BCE’s Stock Price Has Fallen to its 10-Year Low of $44: How Low Can it Go?

BCE stock price has dipped 39% in two years and shows no signs of growth in the next few months.…

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

Invest $10,000 in This Dividend Stock for $3,974.80 in Passive Income

This dividend stock gives you far more passive income than just from dividends alone, so consider it if you want…

Read more »

Payday ringed on a calendar
Dividend Stocks

This 6% Dividend Stock Pays Cash Every Month

Can a 6% dividend yield help you build a monthly retirement income? An investment made right can help you build…

Read more »

Payday ringed on a calendar
Dividend Stocks

Passive Income: How Much Should You Invest to Earn $1,000 Every Month?

These three monthly-paying dividend stocks can help you earn a monthly passive income of $1,000.

Read more »

clock time
Tech Stocks

Up 47%, Is it Time to Buy Payfare Stock?

Payfare (TSX:PAY) stock has been rising higher in the last six months after dropping significantly since 2021. Is it time…

Read more »

Dividend Stocks

3 Dividend Stocks to Double Up on Right Now

Some of these dividend stocks will take longer to recover than others, but they'll certainly pay you to stick around.

Read more »