For the stock market, December wasn’t the most wonderful time of the year. Economic instability persists in Europe, the U.S. is still trying to dig itself out of a recession - and it’s teetering on the edge of a “fiscal cliff” that could tank the country’s stock market, and possibly ours as well. But here’s the thing about the stock market: someone always wins. When the job market gets tough, discount grocery stores thrive; when the housing market booms, so do home improvement stores; when people stop going to movies, they start watching them on Netflix. So, while the Canadian stock market was pretty tepid in 2012, some stocks enjoyed runaway price increases. We’ve selected a few from the list of top movers in 2012. Our criteria: To highlight some of the key industries that are succeeding and avoid stocks that trade below $5 per share.
Over the course of 2012, Africa Oil Corp.’s stock price has enjoyed a steep ascent, growing more than 300 percent in 2012. Rather than tearing things up in the infamous Canadian oil sands, however, this Canadian oil and gas company is digging for black gold in Kenya, Ethiopia, Mali and Somalia through its 45 percent equity interest in Horn Petroleum Corporation. The company’s stock began soaring in March, when it announced that it had discovered oil at one of its discovery wells in Kenya. The company uses advanced technology to find unexplored oil deposits using aerial surveys. But investors should be cautious here. While the market may be excited about this stock’s potential, the proof will be in whether it’s able to pump oil out of the ground and turn it into profit.
The U.S. housing market is a long way from its heyday of a few years ago, but things are picking up, and that’s been enough to propel Norbord’s stock up by more than 275 percent. This Toronto-based company produces wood (or oriented strand board - OSB) panels, which are largely used in residential construction. And thanks to stronger demand for building materials in the U.S., Norbord reported a $282 million profit in the third quarter of 2012. This helped further the upward momentum this stock was already enjoying, allowing it to set new all-time highs as late as December. However, some analysts say that fortunes for this and other Canadian wood panel makers won’t be quite as dreamy in 2013, when some U.S. mills may be prompted to re-open to meet increasing demand.
3) H. Paulin & Company (PAP.A) +194%
H. Paulin & Company is one of those behind-the-scenes companies that investors can easily overlook until they hit the list of big movers. And this company, which specializes in made-to-order screws for industrial applications, presented an additional twist in its upward trajectory; it made the news – and money for its investors – in mid-December when The Hillman Group, an American company that produces similar goods, announced that it would purchase the company for approximately 116% of the 20-day volume weighted average price of the shares on the TSX, sending the share price right through the roof. For investors, acquisition isn’t the most glamorous way to make a buck, but H. Paulin & Company is living proof that this type of deal can pay. (Now, if only someone would put in an offer for the ailing Research in Motion...)
A key area of concern for businesses has always been reducing losses from theft. Now, technology has a solution, and one company that provides it is Avigilon Corp., a company that designs and manufactures high-definition security cameras. This type of technology not only keeps external thieves from sneaking out with merchandise, it also helps put a lid on internal theft, which makes up one-third of the annual $4-billion that Canadian retailers lose to shrinkage, including theft, according to a recent study by PricewaterhouseCoopers LLP and the Retail Council of Canada. For retailers, the better their surveillance technology, the better it protects them from loss. Maybe that explains why Avigilon’s stock rose by more than 180 percent in 2012, topping the list of Canada’s fastest-growing tech firms. It doesn’t hurt that it’s also a cash-rich, debt-free company. (If only we were all so lucky!)
Hello? Is there value in this stock? Redline Communications is a designer, manufacturer and retailer of broadband products. It’s also become a growing potential value stock that managed to hit investors’ radar in the past year. Redline’s stock rose by about 140 percent in 2012, most of which occurred after the company made an announcement in July about a $2 million order for its rugged industrial wireless system by an oil and gas company. That may not sound like a huge contract, but it’s significant for a company of this size. To investors, it also signals a strengthening relationship with the oil and gas industry, which is making up an increasing portion of Redline’s business. That relationship in itself is worth noting; the oil industry is an important ally, and certainly one that can change the fortunes of a small company like Redline.
AutoCanada calls itself Canada’s premier auto dealer; its stock price certainly suggests it’s in the running. The stock rose 140 percent in 2012, ticking quickly and steadily upward throughout the year. In November, AutoCanada announced its highest quarterly earnings in company history, and increased its dividend rate, which now sits at $0.68 per share. Key metrics like revenue, gross profit and same-store revenue all increased over the company’s third quarter as well. The investor appeal when it comes to this stock is pretty obvious, but it isn’t all roses; the company’s only been public since 2006 and some analysts have cautioned that it still has some management kinks to work out.
Brookfield Residential Properties is a land developer and homebuilder that’s active in several markets across the U.S. and Canada. Its stock rose by nearly 120 percent over 2012, propelled, much like Norbord, by rising home prices in the U.S. The housing market has been delivering a wild ride in recent years, but because Brookfield is split between Canada and the U.S. – and perhaps because it’s managed to choose markets that have avoided the worst of the crash – it seems to be able to continue powering forward come what may. It has even remained profitable when the housing markets were not. If housing keeps growing in 2013, this company seems poised to lead the pack.
It was the best of times ...
2012 may not have been the best of financial times, but it was hardly the worst, and many Canadian companies found ways to capitalize on growth in the U.S. market. While it’s impossible to predict what 2013 will bring, some companies always succeed at finding profit. So rather than lament about one crash or another, it’s really up to shrewd investors to find those profit-seeking companies and grab a little good fortune for themselves.
Just remember that in business, someone always wins. Let that someone be you…
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