Canadian GDP declined 0.3% in August, according to a data recently released by Statistics Canada. The manufacturing sector was a notable drag on GDP, contracting 1% in the month of August. Durable and non-durable manufacturing experienced a drop, falling 0.1% and 2%, respectively. Mining also declined 0.8% for the month.
With the Canadian economy slowing, and NAFTA negotiations still proving a headache for North American manufacturing, let’s look at three stocks that could be affected heading into the final months of 2017.
Winpak Ltd. (TSX:WPK) is a manufacturer and distributor of packaging materials and machines. The stock has climbed 10% in 2017 as of close on November 2 and 8.6% year over year. Winpak released its third-quarter results on October 26. Revenue increased to $218.3 million compared to $204.7 million in Q3 2016. The company posted net income of $26.3 million in comparison to $25.1 million in the previous year.
Winpak leadership expects sales volumes to continue at the same clip it saw in the third quarter, and after passing through a tumultuous period, there is reason to be confident in this forecast. The ongoing NAFTA negotiations are also a concern for Winpak. I discussed the possible impact of the end of NAFTA for manufacturing stocks here. However, as Bank of Canada governor Stephen Poloz recently pointed out, any predictions on the fallout from a scuttling of NAFTA is speculation.
Yamana Gold Inc.
Shares of Yamana Gold Inc. (TSX:YRI)(NYSE:AUY) have declined 11.6% in 2017 and 27% year over year. The stock continues to show weakness, even during periods of strength for the spot gold price this year. The Toronto-based gold producer released its third-quarter results on October 26.
The company increased its silver production by 8% and copper production by 27%; the latter metal has been in an impressive bull run in 2017. Revenue increased to $494.4 million from $464.3 million in the third quarter of 2016. It posted net income of $38.3 million compared to a $2.1 million loss in the previous year.
Gold and silver have been in a steady decline since mid-September, as the U.S. dollar has shown renewed strength. In an October article, I discussed the drop in precious metals prices and whether or not investors should duck out in the final months of 2017.
Domtar Corporation (TSX:UFS)(NYSE:UFS) is a Montreal-based designer, manufacturer, marketer, and distributor of paper products. The stock has climbed 15.9% in 2017 and 25% year over year. The company released preliminary third-quarter results on October 27. It reported net earnings of $70 million, or $1.11 per share, compared to $38 million, or $0.61 per share, in Q3 2016.
The company has continued to post strong EBITDA and cash flow in 2017. The stock also offers a dividend of $0.53 per share with a 3.5% dividend yield. Domtar has been subject to some environmental criticism in the past, but moving forward, this is a solid add with a wide economic moat.
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 Ambrose O'Callaghan has no position in any stocks mentioned.