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Falling Canadian Dollar Boosts Appeal of Canadian Stocks

That is especially true for natural resources, particularly oil and gas assets.

There are many oil and natural gas firms operating in Canada that are attractive for long-term investors. These range from prominent blue-chips such as Suncor Energy (SU) and Canadian Natural Resources Limited (CNQ) to promising small-caps such as Octagon 88 (OCTX:OTC) and Americas Petrogas (APEOF:OTC). Warren Buffett is a major shareholder in Suncor Energy.

As I wrote in a previous article on TheStreet, the small-caps have tremendous potential. Speaking at the "Invest for Kids" conference in late October, Mark Lasry, co-founder of the Fifth Avenue Capital hedge fund, recommended Connacher Oil (CLL:Toronto), a Canadian small-cap oil and gas entity to the crowd.

For gold investors, Canada is at the forefront, too. Goldcorp (GG) and Barrick Gold (ABX) are the two biggest mining names in the world, by market capitalization. There are also many promising small-caps in the precious metals group. Nevsun Resources Limited (NSU), with a market capitalization of about $610 million, has a profit margin of more than 20%, a dividend of around 4.5% and no debt.

Legendary investor Jim Rogers is known for remarking that a weak currency is the sign of a weak economy, which is the sign of a weak government. That is clearly not the case with Canada. Due to declines in demand for many commodities, the Canadian dollar is down. But the loonie will rise again, as will the share prices of many of companies operating in Canada.

At the time of publication, Jonathan Yates had no positions in any of the stocks mentioned in this article.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.


Jonathan Yates is a financial writer who has had thousands of articles appear in periodicals and Web sites such as TheStreet, Newsweek, The Washington Post and many others. Much of his career was spent working on Capitol Hill for Members of Congress in both the House and Senate, on both committee and personal staff.  He was also General Counsel for a publicly traded corporation.  He has degrees from Harvard University, Georgetown University Law Center and The Johns Hopkins University.
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