2020 was a wild ride for the stock markets.
Against the backdrop of a global pandemic, the markets rallied to new highs, with the TSX rounding out the year at 17,433.40.
At the same time, TipRanks, a financial technology company, tracked the performance of financial analysts who published recommendations throughout 2020, including ratings for the Canadian stock market.
To this end, TipRanks calculated the success rate, or the number of profitable recommendations measured over a three-month period, as well as the average return per rating for the analysts that covered the Canadian market in 2020. What’s more, TipRanks identified the most profitable rating published by each analyst.
In terms of the calculations, we opened a holding for each recommendation, which stayed opened for three months or until the analyst modified their recommendation. A modification could include a rating upgrade or downgrade as well as a price target change.
As for the average return per rating, this was determined using a three-month holding period or until the position was closed. For example, +25% would indicate the average profit over a three-month period.
Here are the results:
Andrew Semple, Echelon Wealth Partners
Earning the title of 2020′s best-performing Canadian analyst is Andrew Semple.
The Ivey Business School at Western graduate worked as a summer analyst for RBC Dominion Securities and CIBC World Markets before accepting a position as an Equity Research Associate in 2018 at Echelon Wealth Partners. From there, Mr. Semple worked his way up to become an Equity Research Analyst at the firm.
Mr. Semple’s track record more than backs up his No. 1 position on TipRanks’ list. In 2020, the analyst achieved a stellar 96.6-per-cent success rate. On top of this, his calls generated returns to the tune of 47.7 per cent, on average.
While this performance is remarkable, one recommendation in particular stands out.
Between May 8 and Aug. 8, Mr. Semple’s “buy” rating for Columbia Care Inc. (CCHW-CN) delivered a return of 99.3 per cent.
Columbia Care recently revealed that it is set to acquire Green Leaf Medical for $240-million, and Mr. Semple is optimistic about the deal as it will expand “Columbia Care’s operations in four key limited license medical markets.” As part of the agreement, Columbia Care will gain access to Green Leaf’s cultivation operation in Pennsylvania, its medical dispensary in Ohio as well as its vertically integrated operations in Maryland and Virginia.
“We are encouraged to see the Company significantly expand operations in some of America’s most attractive cannabis markets. This is aligned with the Company’s renewed strategic focus on building meaningful scale in key markets, which we believe accelerates its profitability ramp,” Mr. Semple opined.
The analyst further explained, “We believe this acquisition will be highly accretive to Columbia Care shareholders, with room for further upside to our model if industry demand continues to grow at a robust pace, or if adult-use sales are approved in any of these four states.”
Based on all of the above, the top analyst reiterated a “buy” rating and gave the price target a lift, with the figure moving from $10 to $11.50.
Doug Taylor, Canaccord Genuity
Claiming the second spot on TipRanks’ ranking is Canaccord Genuity analyst Doug Taylor.
After graduating from Wilfrid Laurier University, Mr. Taylor kicked off his career as an Equity Research Associate at Thomas Weisel Partners, and later joined the team at TD as an Equity Research Analyst. Then, in 2015, he came on as Managing Director and Equity Research Analyst at Canaccord Genuity, covering the healthcare IT sector for the firm.
Over the past year, Mr. Taylor’s recommendations, on average, notched returns of 31.5 per cent. Additionally, his success rate for 2020 comes in at 77 per cent.
Out of all his picks during the course of the year, his “buy” rating on CloudMD Software & Services Inc. (DOC-X), a healthcare services provider that operates through brick-and-mortar clinics and telemedicine as well as pharmacies, was the most profitable. From June 16 through Oct. 16, shares soared 337.1 per cent.
Commenting on the company’s mixed Q3 results, Mr. Taylor noted, “These results reflect only a portion of the asset base the company has assembled through recent M&A activity,” with many acquisitions being finalized after the quarter wrapped up.
Since the beginning of June, CloudMD has announced 10 acquisitions, with the total consideration landing at roughly $57-million, including all cash, shares and potential earnouts. What’s more, Mr. Taylor points out that it has $60-million in cash that it could put towards additional M&A, which could fuel upside to his estimates.
“DOC trades at 9.2 times 2021 EV/Sales but we note that this valuation could be lowered should the company continue to deploy capital on accretive M&A,” Mr. Taylor added.
All of the above prompted Mr. Taylor to maintain a “buy” rating as well as a $3.25 price target on the stock.
Paul Quinn, RBC Dominion Securities
Paul Quinn is 2020′s third best-performing stock picker, coming on at RBC Dominion Securities as a paper and forest products analyst in 2008.
The analyst, who is based in Vancouver, has a coverage universe that includes both the U.S. forestry sector as well as the Canadian market. As evidence of his expertise in the space, Mr. Quinn has held positions with MacMillan Bloedel and Weyerhaeuser. Previously, Mr. Quinn covered the paper and forest products spaces and was an assistant director of research at Salman Partners.
In 2020, Quinn posted a success rate of 75 per cent, with the average return for his calls landing at 18.1 per cent.
What was his most profitable call during the last year? It was his Buy rating on Rayonier Advanced Materials Inc. (RYAM-N), with the stock climbing 152.7 per cent higher from April to June of 2020.
Shares have been under pressure over the last few years as the paper company has had to deal with negative trends in the core Cellulose Specialties business. However, Mr. Quinn sees Rayonier Advanced Materials as an “attractive investment.”
Specialty cellulose prices grew by $39 quarter-over-quarter to reach $1,348 per ton, which is the highest level since Q1 2018. “While we expect that the increase was at least partially driven by an improved mix, we expect that investors will view higher prices favorably given that every $50 per ton change in specialty cellulose prices has a $25-million impact on annual EBITDA,” Mr. Quinn explained.
Additionally, management has indicated that viscose prices are on the mend. To this end, stronger viscose markets could enable higher asset utilization and keep costs lower. As for lumber prices, they hit a new record during the quarter, which contributed to the strong performance, in Mr. Quinn’s opinion.
“Although lumber prices have come down in Q4, prices still remain near all-time record levels and the setup for 2021 remains quite strong,” Mr. Quinn stated.
It should come as no surprise, then, that Mr. Quinn sides with the bulls, reiterating a Buy rating on the stock. The analyst also left his $5.50 price target as is.
Rob Goff, Echelon Capital Markets
Coming in fourth place, Rob Goff has built an impressive 34-year career as an analyst, working at firms like Credit Suisse, Haywood Securities, Northland Capital and Byron Capital.
Focusing primarily on the telecom and new media spaces, Mr. Goff joined Echelon Capitol Markets as Managing Director and Head of Research in 2013.
Mr. Goff’s stock picking abilities speak for themselves, with the analyst boasting a 68-per-cent success rate for 2020. What’s more, the analyst saw an average return per rating of 49.7 per cent throughout the year, the highest among this group of pros.
When it comes to Goff’s most profitable recommendation, his “buy” rating on Acuityads Holdings Inc. (AT-T) generated the biggest return in 2020. In the three-month period starting from September 15, shares skyrocketed approximately 290 per cent.
AcuityAds’ announcement that it was included in the 2020 AdExchanger Programmatic Power Players List, a directory of 60 globally leading agencies, solutions providers and partners in the industry, only reaffirmed Mr. Goff’s bullish thesis. This inclusion is primarily tied to the success of illumin, its Self-Serve AdTech platform.
“We believe the event will build momentum around the illumin brand and service capabilities as it opens additional market opportunities for AT. The nomination reflects impressive industry response to the illumin platform. We have discussed the potential for the platform to gain million-dollar+ contract wins along with the earlier-than-anticipated commercial traction of the product. AT has indicated that it anticipates booking revenues in Q420 ahead of its original expectations,” Mr. Goff commented.
On top of this, “financial and technology momentum has clearly made it a more attractive acquisition candidate,” according to the Echelon analyst. “Alternatively, we would expect potential acquisitions to be well received as the Company’s platform (in-house technology) would be expected to support immediate accretion or alternatively acquisitions could lever illuminTM to expand its total addressable market,” Mr. Goff added.
To this end, Mr. Goff kept a “buy” rating on the stock. In a further bullish signal, the analyst increased the price target to $13.50, up from $9.75.
Tom Gallo, Canaccord Genuity
Grabbing the final place on TipRanks’ list, Tom Gallo worked as a project geologist for six years before kicking off his career as an analyst.
In 2017, he joined the Canaccord Genuity team as an Equity Research Associate. Mr. Gallo worked in this role for one year, before becoming Vice President Equity Research, Mining Analyst at the firm.
Mr. Gallo’s track record speaks for itself. On average, the analyst’s recommendations returned 24.4 per cent in the last year. Looking at his success rate, the figure lands at 74.6 per cent.
At the top of his list of most successful calls is his “buy” rating on Argonaut Gold Inc. (AR-T), with the stock soaring 151.5 per cent between March 30 to June 30 of 2020.
Speaking to the gold market as a whole, Mr. Gallo puts it simply, “Either way you slice it, we remain bullish on gold.” The combination of continued government stimulus, high broader market valuations and fundamental uncertainty set the scene for strong gold prices.
Against this backdrop, Mr. Gallo cites Argonaut as one of his top plays in the space, despite its underwhelming performance in the most recent quarter. Hit hard by COVID-19 shutdowns, third quarter production landed at 49.0koz GEOs, with the year-to-date production coming in at 122koz GEOs. Additionally, its operations in Mexico were affected by seasonal weather conditions.
That said, Mr. Gallo remains optimistic about the company’s long-term growth prospects as he sees significant catalysts on the horizon. “We expect the company to begin construction on the Magino project in early 2021. In addition, we expect drill results from the Phase 2 program at Magino throughout the rest of 2020 as the company works to define a higher-grade underground resource… We also expect an update on the permitting of Cerro del Gallo,” he commented.
In line with his optimistic approach, Mr. Gallo stayed with the bulls, leaving a “buy” rating on the stock. He did, however, reduce the price target from $4.25 to $4.
Maya Sasson is News Chief Editor with TipRanks.ca
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.