What are we looking for? In case you missed it during the World Cup euphoria, we've sneaked past the mid-point of what has been a less-than-thrilling year for the Canadian stock market. It may not deserve a yellow card, but it certainly deserves to be called a foul.
But not all stocks go as the overall market goes; within this anemic market, there have been, as always, pockets of success. Today, we examine the stocks in the S&P/TSX composite index that have put up the strongest returns in the first half of 2010.
The halftime report Through the first six months of the year, the S&P/TSX composite index slipped almost 4 per cent. It's been an up-and-down half-year, in which the market has never really established any clear momentum, amid nagging worries about global economic growth, earnings expectations and interest-rate policies.
However, there were plenty of opportunities for stock-pickers to beat the index. Over all, 57 per cent of the index (131 of the 229 securities) posted price gains in the first half; 64 per cent outperformed the index.
Of those, 54 - or almost one-quarter - enjoyed gains exceeding 10 per cent, while 27 of them (12 per cent) surged more than 20 per cent.
The leaders A look at the top 20 percentage price gains on the S&P/TSX composite over the first half shows a preponderance of smaller to mid-sized mining names, particularly those tilted toward gold - the one commodity that has consistently shown strength, as investors have sought it out as a safe haven amid rising sovereign-risk concerns.
However, several names in the top 20 are prominent industrial manufacturers, such as auto-industry-related firms Magna International, Linamar Corp. and Westport Innovations, as well as steel maker Gerdau AmeriSteel. It suggests investors have been placing bets on an industrial recovery - and seeking out stocks that may have been unjustly battered by the troubles at the big U.S. auto makers.
One thing that does stand out about the high-flying stocks of the first half, though, is how expensive most of them look now. Almost half the top-20 stocks don't even have price-to-earnings ratios because they don't have positive earnings; among the ones that do have a calculable P/E, the average multiple is more than 35 times earnings. It raises a question about whether many of these stocks will be able to build on their first-half gains going forward.