The January Effect

While last blog earlier this week focused on the stock performance over the past 52 weeks (19.55% gain), today I’ll review picks made on the last column in December 4 weeks ago. 4 of the 5 income/value picks increased in price for an average gain of 3.38%. Top gainers were TD (+5.50%) and Royal (RY) +5.22%. Only loser was BCE -0.92%. 6 of the 8 growth stocks increased in price for an average gain of 5.06%. Also six of the selections hit new 52 week highs during the period including Agrium (AGU), Canadian Natural Resources (CNQ), Labrador Iron Ore Units (LIF.UN), Potash (POT), Silver Wheaton (SLW) & Teck Resources (TCK.B). Top gainers were Potash (POT) +21.89% and Agrium (AGU) +11.24%. Top loser was Agnico Eagle (AEM) –10.33%.

In the portfolios I manage I purchased on several occasions: (1)  Bank of Montreal for an average purchase price of $57.56 (currently $59.53); Canadian Natural Resources (CNQ) for an average price of $41.69 (currently $41.53); (3) Research In Motion (RIM) for $61.67 (currently $64.18). Other stocks I purchased in late December well below their current closing price included: Agrium (AGU), BCE, Rogers (RCI.B), Royal (RY) & TD.

Stock Markets almost always perform well during the 3^rd year of a US presidential term and January is most often an indicator of the future year’s performance. As such it looks like it could be a strong year for the markets irrespective of the high US unemployment and weak housing market.

Longer term stock recommendations include value/income stocks: BCE, Rogers (RCI.B), Telus (T), Bank of Montreal (BMO), National (NA), Royal (RY), TD and ex-income trusts Arc Resources (ARX), Crescent Point Energy (CPG), Pengrowth (PGF) & Vermillion (VET). Growth recommendations going forward longer term (try to buy on dips) include: Agrium (AGU), Potash (POT), Canadian Natural Resources (CNQ), Labrador Iron Ore (LIF.UN), Potash (POT), Research In Motion (RIM), Suncor (SU), Talisman (TLM), & Teck Resources (TCK.B). It doesn’t look like precious metal stocks will be headed higher if the US economy improves however for more speculative recommendations, watch Agnico Eagle (AEM), Kinross (K) & Silver Wheaton (SLW). Good Luck.