Lists & Rankings

Graduates to the TSX

The TSX newcomers on the block with large potential but high unpredictability.


 

Methodology: These are I-500 companies that made the leap from the TSX Venture Exchange to the main bourse since last year’s list, in part by growing their market capitalization or asset base.

Why you should care: There is opportunity to invest in these TSX entrants while they’re still young, but be mindful of the volatility and unpredictability that accompany potential. Five of these seven companies aren’t generating any income right now; only Avion and Southern Pacific showed positive cash flow in their last earnings reports.

Worth noting: The class of 2011 isn’t very diverse. While technology and food products companies appeared on the graduates list in the past, this year’s crop is made up solely of resource exploration and development operations (for which the TSX Venture Exchange was originally intended). The bevy of gold miners is not surprising, considering the gold price run-up, with bullion futures topping a record $1,500 in April. While all these gold stars are Canadian-owned, many operate mines abroad. “Canadians go far afield to find resources, and that is reflected in this tier group,” says Barry Allan, a mining analyst at Mackie Research Capital.

The two outliers on the list are Southern Pacific, a junior oilsands company, and Whitecap, which explores for oil and natural gas in Western Canada. Both have all six analysts that follow them recommending buys, though a new conservation policy by the Alberta government threatens some of Southern Pacific’s development plans and, as a result, its growth prospects.