Bloomberg News

Canadian Stocks Poised for Best Gain Since August on Europe

October 16, 2012

The Standard & Poor’s/TSX Composite Index headed for its best gain since August as U.S. industrial production beat forecasts and two German lawmakers said the country is open to Spain seeking a precautionary credit line.

Thompson Creek Metals Co., a producer of molybdenum in Canada and the U.S, and Iamgold Corp. (IMG), a producer of the precious metal, added at least 3.4 percent. Regal Lifestyle Communities Inc. (RLC) slid 0.5 percent in its trading debut after a C$138.8 million ($140.8 million) initial public offering.

The S&P/TSX (SPTSX) rose 162.07 points, or 1.3 percent, to 12,392.03 at 12:35 p.m. in Toronto. It has rallied 9.8 percent from this year’s low on May 18, and is up 3.6 percent in 2012.

“There’s an effort to have them working together to solve the European crisis,” Bill Harris, who manages C$279 million at Avenue Investment Management in Toronto, said in a telephone interview. “Any good news that comes out at the moment will get stocks to bounce back.”

Equities rose as Michael Meister and Norbert Barthle, officials within Chancellor Angela Merkel’s Christian Democratic bloc, indicated a reversal to German resistance to a full bailout for Spain. A report showed U.S. industrial production increased a more-than-forecast 0.4 percent in September, partially reversing the prior month’s slump and indicating manufacturers are regaining their footing.

Canadian factory sales rose three times faster than economists forecast in August on gains in energy and automobiles. The Canadian dollar weakened the most in almost three months against its U.S. peer after Bank of Canada Governor Mark Carney suggested he may reduce his economic outlook and delay raising policy interest rates.

Biggest Gains

All 10 groups in the S&P/TSX rose as health-care and raw- material companies had the biggest gains. Thompson Creek Metals added 5.8 percent to C$2.76. Iamgold increased 3.4 percent to C$15.77.

Argonaut Gold Inc. (AR) added 1.5 percent to C$9.79 after being raised to outperform from neutral at Macquarie Group Ltd. by equity analyst Michael Siperco. The 12-month share-price estimate is C$12.

Loblaw Cos. gained 2.6 percent to C$34.75. Canada’s largest grocery chain by market capitalization will cut 700 jobs and take a $60 million charge as it seeks to reduce costs after projecting annual profit would fall below last year.

Regal Lifestyle fell 0.5 to C$9.95. The company, which plans to buy 10 retirement communities in Canada, sold about 13.9 million shares on Oct. 4 in a sale led by Canadian Imperial Bank of Commerce and Bank of Montreal.

Additional Sale

The banks have the option to sell an additional 15 percent of the company, which would increase proceeds to about C$159.6 million, the Toronto-based company said in an Oct. 5 statement.

Ivanplats Ltd., a mining company founded by billionaire Robert Friedland, raised C$300.8 million in its IPO in Toronto after selling shares at the lower end of the marketed range. Ivanplats sold 63.3 million shares for C$4.75 apiece yesterday, within its offered range of C$4.50 to C$5.40 each, according to sales documents. The stock will trade in Toronto under the ticker IVP.

Ivanplats is the largest Canadian mining IPO since Tahoe Resources Inc. (THO) raised C$348 million in its 2010 share sale. The company plans to use proceeds from the sale for exploration and development projects in Africa and to complete the purchase of the Kipushi copper-and-zinc mine in the Democratic Republic of Congo from companies associated with Dan Gertler, an Israeli mining investor, according to a Sept. 28 prospectus.

Best Performing

Gildan Activewear Inc.’s (GIL) drive to take market share from Berkshire Hathaway Inc.’s (B:US) Fruit of the Loom and Hanesbrands Inc. (HBI:US) has made it the best performing North American underwear stock this year.

Gildan, the biggest supplier of blank tops to makers of printed clothing such as T-shirts, has soared almost 70 percent this year, the most among 23 North American apparel, footwear and accessories makers with market values of more than $1 billion, according to data compiled by Bloomberg. The shares are trading at 36 times earnings as investors back the company’s move into the retail market for socks, underwear and undershirts.

“Why this year will be a major breakthrough for us is we’ve taken our low-cost manufacturing and enhanced it with quality features at the same time as giving the retailers better margins than Fruit or Hanes,” Glenn Chamandy, chief executive officer, said last week by phone from Montreal, where the company is based. “That’s how you win shelf space.”

To contact the reporters on this story: Eric Lam in Toronto at elam87@bloomberg.net; Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net


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Companies Mentioned

  • B
    (Barnes Group Inc)
    • $32.5 USD
    • -0.53
    • -1.63%
  • HBI
    (Hanesbrands Inc)
    • $108.24 USD
    • 0.59
    • 0.55%
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