Last week began our analysis of past picks by outlining what happened with stocks we liked before Oct. 27, 1997. As everyone knows, the investment climate shifted dramatically in late October as the Asian problems came slamming into North American markets. Since then the pickings in the Canadian market have been tougher.
This week we take a look at three stocks that have done well for us since that terrible late-October dive:
We originally bought Loblaws back in January '97 at C$16. Loblaws, a retail food company, is the leader in the Canadian grocery business. Even when the market stumbled, Loblaws rallied. We bought more at the end of November at C$22.50 as it broke out (see
). Today it trades at C$27. All in all Loblaws has returned 69% since we first bought it, but it has returned 20% in the last couple of months since we rebought it. Those are strong numbers given the tough market environment in Canada. On the fundamental side Loblaws is expanding into new businesses. For one, the company has developed its own banking system specifically for its customers. The new bank will cater to its customers in the attempt to make their lives easier. Kind of a one-stop shopping and banking company.
CGI Group is a technology services company that is starting to make a name for itself. CGI broke the C$100 million revenue mark for the first time in 1996, when it bought
. With that acquisition CGI raised its revenue to C$236 million and they are expected to hit C$300 million by 1999. Just when you thought you were in for steady growth, CGI did a deal with
that changed everything. By the end of June it will own
, which should boost revenue to the $1 billion mark -- a growth explosion. With the Bell Sigma acquisition CGI's order backlog will increase to C$4.5 billion from C$1.75 billion. The company has also been added to the TSE 300 and 200 indices, and it was the exchange's best performer in 1997. We bought CGI at C$24 on a breakout in mid-December (see
). The stock has had good momentum and is trading at C$34, a return of 42%.
Transalta is an interest-rate play. The company is the major supplier of electricity in Alberta and also supplies electric and thermal energy and distributes gas and electricity services worldwide. We bought Transalta in the beginning of November at just under C$20. It has run up to about C$23 and it looks like it is in a consolidation phase (see
). So far we are up 15%. If Transalta keeps bringing in the dough and our interest structure doesn't change too much, there is no reason Transalta can't go higher. The company just reported that fourth-quarter profit soared on new generating stations. There is a definite growth profile being created here and as long as that stays intact we will continue to like the stock.
These are the stocks that were bought in a sick market. From our experience stocks that perform well in relation to a down market will lead the next market upturn. Now that the markets have turned around we are watching these stocks very carefully, expecting them to be big winners.
Greg Guichon and Michael Soni, along with their team, manage money internationally on behalf of high-net-worth individuals and institutions. Guichon and Soni, who are based in Toronto, invest exclusively in Canadian stocks. Their column appears every Monday in TheStreet.com. Under no circumstances does the information in this column represent a recommendation to buy or sell stock. Your email is welcome and may be sent to