Are analyst recommendations a good tool for measuring the success of a stock in the current stock market? We decided to run a Bloomberg extraction looking at companies listed on the Toronto and Venture exchanges. Those selected had to have the highest analyst consensus of 5 and more than three contributing analysts. A total of 56 companies passed this membrane. Of these only six (6) had positive one year total share price returns as at the close of market on December 19, 2008. The other 50 had negative returns ranging up to a loss of 89%. The six winners were:
1. Gold Wheaton Gold Corp. (GLW) purchases precious metals streams from producers and had a one-year return of 840% and a share price on Dec. 19 of $0.235. Wheaton hit a high of $1.85 on July 17, 2008.
2. Canadian Energy Services LP(CEU-UN) provides drilling fluid systems to western Canadian energy companies. It had a return of 44.4% with a closing price of $6.70. The 52-week high was $13.20 on July 10, 2008. Canadian Energy pays dividends of about $0.08 per month.
3. Red Back Mining Inc.(RBI) operates gold mines in Ghana and Mauritania and saw a 25.2% return resulting in a closing price of $7.79. On July 21, 2008, RBI his its 52-week high of $9.25.
4. Paladin Labs Inc.(PLB), a pharmaceutical company, recorded a 14% increase to close at $11.50 on Dec. 19. Rather than a July 52 week high, Paladin reached $12 on Dec. 4, 2008
5. Allied Nevada Gold Corp.(ANV), owns gold and silver prospects, and showed a 5.6% one-year increase with a share price of $5.43. The 52-week high of $6.90 was recorded on June 18, 2008.
6. Constellation Software Inc.(CSU) eased onto the list in with a 4.9% increase closing at $26.50. This company’s 52-week high of $29.50 was on Sept. 2, 2008. Constellation paid a dividend of US$0.18 in March 2008.
In the next blog, I’ll list the six companies that received these high analyst rankings but had total shareholder losses of greater than 75%.