There are thousands of sell-side analysts publishing piles of stock recommendations every day. But not all these analysts are worth following.
The key question is: how do you know who to trust?
TipRanks is a website that tracks and ranks analyst recommendations. It helps investors follow the recommendations of best-performing analysts with a proven track record of success.
Using this data, TipRanks has now published a list of Canada-focused stock pickers who had the most success last year.
To compile the list, TipRanks algorithms calculated the average return and statistical significance of each rating, as well as the overall success rate i.e. the percentage of profitable ratings. Each rating made during 2018 was measured over a time-frame of 3 months.
Here is TipRanks' list of the Top 10 Canadian analysts in 2018, and their most profitable stock pick:
Himanshu Gupta, GMP FirstEnergy
Industry: Real Estate
Success Rate: 87.5%
Average Return: 7.4%
Noteworthy recommendation: Dream Global REIT (DRG-UN-T)
With Mr. Gupta’s “buy” recommendation for Dream Global on Feb. 23, 2018, he made a profit of 21.5 per cent in three months. He has since reiterated his buy rating with a $15 price target for 17-per-cent upside potential.
With a portfolio of over 230 properties, Dream is a real estate investment trust (REIT) that operates across Germany, Austria, Belgium and the Netherlands.
**
Troy MacLean, BMO Nesbitt Burns
Industry: General
Success Rate: 77.3%
Average Return: 5.5%
Noteworthy recommendation: Canadian Apartment Properties REIT (CAR-UN-T)
On April 3, Mr. MacLean initiated Toronto-based REIT Canadian Apartment with a buy rating. Shares of one of Canada’s largest residential landlords surged by an impressive 17.7 per cent over the next three months.
MacLean has since reiterated his CAR “buy” rating two more times. He currently has a $50 price target on the stock.
**
Neil Downey, RBC Dominion Securities
Industry: Financial
Success Rate: 90%
Average Return: 7.7%
Noteworthy recommendation: Dream Global REIT (DRG-UN-T)
Mr. Downey’s recommendation of Dream Global was also his most profitable call last year. From Feb. 22 until May 22, shares jumped 21.8 per cent. Like Himanshu Gupta, Mr. Downey sees shares rising a further 17 per cent to $15.
**
Phillip Huang, Barclays
Industry: Technology
Success Rate: 71.43%
Average Return: 5.4%
Noteworthy recommendation: Corus Entertainment Inc (CRJ-B-T)
Mr. Huang’s most profitable call was not a “buy” rating but a “sell” rating for Corus Entertainment on Jan. 10. The stock dropped 23.5 per cent in the three months after Mr. Huang’s call.
Corus Entertainment, a Canadian mass media and broadcasting company, plunged by 59% in 2018 due to four straight quarters of advertising revenue decline.
**
Jenny Xenos, Canaccord Genuity
Industry: Basic Materials
Success Rate: 50%
Average Return: 10.5%
Noteworthy recommendation: TransGlobe Energy (TGL-T)
Ms. Xenos’s most profitable recommendation of 2018 (with a three-month profit of 197.6 per cent) was for the oil and gas exploration stock TransGlobe Energy on April 11. She still has a “speculative buy” rating on TGL with a $6 price target for further upside potential of 138 per cent.
According to the analyst’s report, this rating is used for stocks bearing significantly higher risk that typically cannot be valued by normal fundamental criteria.
**
Michael Smith, RBC Dominion Securities
Industry: Financial
Success Rate: 83.3%
Average Return: 5.5%
Noteworthy recommendation: InterRent REIT (IIP-UN-T)
Mr. Smith reiterated his “buy” rating on the growth oriented-REIT InterRent on February 13. In the three months from his call, the stock climbed 21.3 per cent. However, the analyst subsequently downgraded IIP from" buy" to “hold" at the beginning of 2019, explaining:
“InterRent was the top performing REIT/REOC in our coverage universe in 2018 with a total return of 46.5%. Yet, on the basis of expected risk- adjusted returns over the next 6-12 months relative to our REIT/REOC coverage universe, we are moving our rating to Sector Perform.”
InterRent owns a portfolio of residential apartment units with a strong focus in Ontario and Quebec.
**
Michael Markidis, Desjardins Securities
Industry: Financial
Success Rate: 66.7%
Average Return: 3.5%
Noteworthy recommendation: InterRent REIT (IIP-UN-T)
Mr. Markidis’s most-profitable call last year was also reiterating his buy rating on InterRent on Feb. 23. Markidis made a 14.4-per-cent profit on his IIP recommendation in three months.
Unlike Mr. Smith, Mr. Markidis still has a “buy” rating on the stock with a $14.50 price target (7-per-cent upside potential).
**
Fadi Chamoun, BMO Nesbitt Burns
Industry: Financial
Success Rate: 66.7%
Average Return: 6.5%
Noteworthy recommendation: Bombardier Inc. (BBD-A-T)
Shares in multinational aerospace and transportation company Bombardier Inc soared 28.1 per cent following Mr. Chamoun’s “buy” recommendation on May 3. Even though the stock subsequently lost 55 per cent in the last three months of the year, the analyst still has a “buy” rating on BBD with a $5 price target.
**
Andre Uddin, Mackie Research
Industry: Healthcare
Success Rate: 46.7%
Average Return: 11%
Noteworthy recommendation: Correvio Pharma Corp. (CORV-T)
Mr. Uddin’s best call of 2018 was his buy rating for Correvio Pharma. He made the call on March 14. In the next three months, shares of the Vancouver-based healthcare stock soared 149.7 per cent. He subsequently downgraded CORV from “buy” to “hold” in August, writing “We expect the stock to take a breather.”
**
Paul Steep, Scotiabank
Industry: Technology
Success Rate: 66.7%
Average Return: 4.5%
Noteworthy recommendation: Constellation Software (CSU-T)
Mr. Steep’s recommendation on diversified tech stock Constellation Software proved a success. Shares rose by 22.3 per cent in the three months from his recommendation on Feb. 12.
In fact, this growth-through-acquisition company has seen share prices more than double over the last three years. Mr. Steep still has a “buy” rating on the stock.