4 Stocks to Watch This Week

Full results week for Canadian companies ahead.

| 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

The Toronto Stock Exchange 300 Composite Index (^GSPTSE) lost 1.6% during last week as geopolitical risks and poor local employment statistics weighed on the market.

The overall market momentum continues to be positive, but some valuations are starting to look stretched. Good results from a whole raft of companies reporting this week will be required to support the ongoing bull market. We have selected some of the highlights for further elaboration below.

Encana Corporation (TSX: ECA)(NYSE: ECA), the Canadian-based natural gas producer, is expected to report quarterly results on Tuesday. The market consensus expectation is a profit of $0.50 per share compared to $0.24 a year ago with the improvement derived from lower operating costs and higher product prices. Other gas producers have produced first-quarter results, offering hope for good results from Encana as well.

The recently appointed CEO, Doug Suttles, announced in November last year that his turnaround strategy for the company would include a capital spending focus on the expansion and development of oil and liquid rich assets in six selected areas, strengthening the balance sheet by selling non-core assets, reducing the workforce by 20% and cutting the quarterly dividend.

Recent divestitures of non-core assets raised roughly $2.5 billion, a proposed IPO of bundled rights to mineral fee titles and royalties including 5.2 million acres of land in Southern Alberta is expected to raise substantial further capital, and the acquisition of the Eagle Ford assets from Freeport-McMoran will set the company back $3.1 billion. The first quarter results will provide some indication whether the strategy is working.

Air Canada (TSE: AC.B) is expected to announce on Thursday a loss of $0.45 per share for the first quarter compared to a loss of $0.52 a year ago. The slight improvement is expected despite the harsh winter conditions, weaker Canadian dollar and higher fuel prices countered by higher traffic and ongoing cost control.

The Air Canada share price has improved by more than 300% since the start of 2013 to the current price of $8.10. The company has a four-point strategy to further improve its operating results including additional cost reductions and revenue enhancements. Given the impressive record of delivery of the current CEO, one cannot rule out further improvements in profitability over the next few years.

I have previously written about the possibility that the share price could reach $10 and it seems to be within reach, but the operational improvements of the past few years will have to continue for this target to be reached.

Also on Thursday, Power Corporation (TSX: POW) and Power Financial (TSX: PWF) are expected to report a profits per share of $0.61 and $0.67 respectively. This will represent increases of 13% and 18% compared to the same quarter last year. The bulk of the asset value of Power Corporation consists of the 66% holding in Power Financial, which in turn has major holdings in Great-West Lifeco (TSX: GWO) and IGM Financial (TSX: IGM).

Great West recently announced good results buoyed by increased profits from the recently acquired Irish Life subsidiary while IGM also reported a profit increase although slightly below consensus expectations.

The Power companies have not performed well so far this year and with substantial discounts built into the share prices relative to the underlying asset values, positive results may contribute to an improvement in the performance of the shares.

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.

Fool contributor Deon Vernooy does not hold shares in any company mentioned above. 

More on Investing

A solar cell panel generates power in a country mountain landscape.
Top TSX Stocks

3 TSX Stocks You Can Hold for the Next 3 Decades

While the market faces significant headwinds, it's crucial to ensure that you can commit to the TSX stocks you're holding…

Read more »

energy oil gas
Dividend Stocks

2 High-Yield Energy Stocks to Buy as Recession Approaches

Energy stocks such as TC Energy and Canadian Natural Resources allow investors to generate income even in recessionary times.

Read more »

green power renewable energy
Dividend Stocks

3 Top Dividend Stocks to Drive Your Passive Income

These three high-yielding, safe dividend stocks could boost your passive income.

Read more »

Dial moving from 4G to 5G
Tech Stocks

TFSA Investors: 2 Canadian Stocks With Unbelievable Staying Power 

Amid economic uncertainty, investors look for stocks that can thrive in any crisis and grow long term. Here are two…

Read more »

protect, safe, trust
Dividend Stocks

TFSA Wealth: How to Earn $363 in Monthly Passive Income for Life

Canadian investors can harness the power of the TFSA to generate steady tax-free passive income for decades.

Read more »

Canadian Dollars
Dividend Stocks

TFSA Millionaire: How to Turn $40,000 Into $1.2 Million for Retirement

Here's how TFSA investors are using the power of compounding to buy top Canadian dividend stocks to build retirement wealth.

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

3 Superb Income and Growth Stocks for Every Portfolio

The market is full of superb income and growth stocks, but not all belong in your portfolio. Here are three…

Read more »

stock market
Stocks for Beginners

Worried About Stagflation? 2 Canadian Stocks for All Market Cycles 

Stagflation delays economic recovery. You can keep your portfolio stagflation ready with these Canadian stocks that are suitable for all…

Read more »