The S&P/TSX Composite Index is a fickle beast. While on the surface it can look like a great place to put your investment dollars, dig a bit deeper, and it can be clear that it might be better to look elsewhere.
That’s because the TSX isn’t actually a very diverse set of stocks but focuses in on a few industries. These industries focus mainly on financials, energy, materials, and industrials. That leaves about 5% for the remaining sectors such as communications and tech.
So, when the TSX has a great week, it usually means that one of the industries it focuses on has had a great week. That leaves investors with two great options: finding another fund such as an ETF that focuses on that industry, or digging into the TSX to see what stocks are performing really well.
This week, there were three stocks that stood out to me that investors might be interested in after some stellar performance. Let’s take a look to see if perhaps your investment is better off in one of these smaller, less-expensive stocks, rather than the hefty price tag of the TSX.
In the last month, Franco-Nevada (TSX:FNV)(NYSE:FNV) has hit a rally. After nearing the $100 mark a year ago, the stock plummeted to a 52-week low of $76.53 per share and has slowly worked its way back up. Yet recently, the stock has had a few spikes, most recently in the last week.
After almost reaching its 52-week high of $114 for the second time in a month, shares were sold last Friday only to be bought right back up again. Since the beginning of the year, the stock is up just over 15%.
The recent uptick is likely from two factors. First, that the price of gold broke through a resistance level at hit US$1,350 on June 19. Second, Franco-Nevada is just a great business for investors looking to get in on gold. The streaming company has posted stellar quarterly results the last few quarters, and analysts predict the company to have US$301 million in earnings by 2022.
Lightspeed POS (TSX:LSPD) has been hitting headlines lately after its initial public offering a few months back, with many touting it as the next Shopify. The point-of-sale service is trading around its all-time high this week, growing a whopping 17% in just five days as of writing.
That’s likely because investors are starting to hear more and more about this little-known Montreal company. Lightspeed has a solid balance sheet with buckets of cash on hand. This comes from not having any debts to manage and seeing an increase in earnings from recurring sources. In fact, recurring software revenues grew 34% in the last quarter.
Looking ahead, analysts are optimistic and still think the stock is undervalued. Fiscal 2020 revenues are now projected to reach $110 million after being boosted by the last quarter. Analysts believe the stock is ripe for opportunities such as acquisitions and expansion into an extremely fragmented space. So, despite hitting a 52-week high, this price could only be the beginning.
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Lastly, we have Agnico-Eagle Mines (TSX:AEM)(NYSE:AEM) — a stock that has been on much of the same trajectory as Franco-Nevada but at a lower cost. The stock hit its 52-week high at the beginning of the month and, after a short sell-off, has come right back up to near in on those numbers at the time of writing.
Again, this comes from the strong price of gold but also from the strength of this company — namely, its production. The company has said that over the next few years, production will rise by about 30% after two large mergers and full-year production of 1.75 million ounces of gold.
For investors looking to steer clear of the fickle TSX and find long-term stocks with serious potential, you can’t get much better than these three. As always, this is a starting point, especially given it’s just the last week that we’re looking at. Do your own research and see if any of these stocks are right for your portfolio goals.
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 Amy Legate-Wolfe has no position in any of the stocks mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of Lightspeed POS Inc, Shopify, and Shopify. Shopify is a recommendation of Stock Advisor Canada.