This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Canadian Stocks Likely To Outperform In 2014: CIBC

Stocks in this article: CM

Gains driven by less stretched valuations and more leverage to the global economy

TORONTO, Jan. 14, 2014 /CNW/ - Canadian stocks are likely to outperform American stocks in 2014, finds a new report from CIBC World Markets Inc.

"After being trounced by New York - and Europe and Japan for that matter - in 2013, Toronto stocks entered the year with less stretched valuations, and greater potential for earnings gains that will pay off in outperformance in the year ahead," says Avery Shenfeld, Chief Economist at CIBC.

Mr. Shenfeld, who co-wrote the report with CIBC Senior Economist, Peter Buchanan, notes that Canadian stocks also have more leverage to a rapidly heating global economy than do their U.S. counterparts.

In its most recent forecast, " Outlook 2014: Give Low Rates a Chance", CIBC economists call for 2014 to be the first year since 2010 in which global growth surprises on the upside. They are calling for growth to run at a four per cent pace, about a half-point above current consensus or International Monetary Fund expectations.

Historically, years in which global growth ran at four per cent or better were big winners for the cyclically weighted Toronto Stock Exchange, producing median returns well above the S&P 500. Mr. Shenfeld notes that the "TSX has outperformed the S&P in each of the last six years in which global growth has topped four per cent and 2014 should add to that streak.

"That reflects the heavier weighting in Toronto's benchmark towards resources sensitive to global activity. To this point, sluggish activity has held back demand, in a period in which supply was expanding in such areas as natural gas, oil and base metals. Little wonder, then, that the resource sector has been largely responsible for a disappointing earnings recovery of late, offsetting steady gains elsewhere in the index."

However, he believes the increases in supply for oil, natural gas and metals are already well priced in. "What isn't, is the pressure from demand associated with pleasant surprises in global economic activity," adds Mr. Shenfeld. "That should have oil prices steady but oil futures trading at much less of a discount than now in the curve. Natural gas could hold onto recent gains, while base metals and lumber move higher."

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,662.16 +305.29 1.76%
S&P 500 2,046.75 +33.86 1.68%
NASDAQ 4,726.2340 +81.9220 1.76%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs