Which stocks and sectors could win from expanded trade, what tax-loss selling candidates could also be buys and more from The Week in Stocks.
Stock of the week: Algoma Steel Group Inc.
Shares of Algoma Steel Group Inc. (ASTL:TSX) rose 15 per cent on the S&P/TSX composite index after Prime Minister Mark Carney and Ontario Premier Doug Ford announced $5 billion in support for Canada's beleaguered steel industry , which has been hit with 50 per cent tariffs by the United States. Stifel analyst Ian Gillies said in a note on Oct. 21 that the Sault Ste. Marie-based company in Northern Ontario could be a "key beneficiary" of the fund — some of which had previously been announced — to build a proposed beam mill. The analyst has a buy rating on Algoma and a price target of $11.50 per share. Shares closed Friday at $6.63. "Canada is a significant importer of beam products," Gillies said, adding that both Ontario and Ottawa had previously indicated interest in helping the company build such a facility as the two governments look to reduce the flow of foreign steel imports into the country. Grants from the fund would benefit the company and the shares the most, Gillies said, since Algoma is already carrying $920 million in debt. Shares of Algoma have a 12-month price target of $7.63 based on the calls of four analysts, according to Bloomberg.
Keeping score
These are the stocks and sectors that could win from expanded trade, says Rosenberg
David Rosenberg of Rosenberg Research & Associates said in a report on Oct. 19 that that the move to expand Canada's trade footprint is moving from rhetoric to reality, with exports to countries other than the United States up 30 per cent year over year. The federal government is looking to double exports to other countries by 2036 and Rosenberg identified some potential TSX sector and stock winners as Canada branches out. One of his top sector picks is aerospace and defence , with the TSX aerospace and defence index already up 104 per cent since January 2025. Exports to the U.S. are up three per cent but have risen 20 per cent to the rest of the world. "With global defence spending likely to remain elevated, we see this as one of the more durable secular growth themes in the Canadian market," Rosenberg said. He also likes the prospects for Canadian banks and their international franchises. For example, Bank of Nova Scotia (BNS:TSX) has the strongest exposure to Latin America and meaningful exposure to Europe, while Royal Bank of Canada (RY:TSX) has the "broadest European platform of all" and Bank of Montreal (BMO:TSX) has "significant European capital markets franchise." He also suggested railways and pipelines as another way to play the export card through Global X Equal Weight Canadian Pipelines Index ETF (PPLN ETF:TSX). It has a dividend yield of approximately 4.5 per cent. "The combination of dependable income, relatively low beta (volatility), and long-term exposure to Canada's changing export infrastructure makes the sector a valuable source of diversification," Rosenberg said.
Why these CIBC tax-loss selling candidates could also be buys
Mid-October is the time when investors start to pick through their portfolio for tax-loss selling candidates. In the search for shares to sell, "the same process can create opportunity" for buyers, Sid Mokhtari, an analyst at CIBC Capital Markets, said in a report on Oct. 16. Candidates for tax-loss selling can rebound, especially if the company fundamentals are sound and this is an opportunity "for bargain hunters looking for temporarily oversold and mispriced TSX names," Mokhtari said. CIBC built a list of tax-loss names to sell and potentially repurchase. Among the criteria: shares must have already fallen at least 20 per cent as of the beginning of the tax loss selling period and have recorded an average loss of 1.3 per cent from mid-October to mid-December. Ten of 36 names that fit that bill come from the TSX 60 large cap index and include Telus Inc. (T:TSX), Rogers Communications Inc. (RCI/B:TSX), BCE Inc. (BCE:TSX), Gildan Activewear Inc. (GIL:TSX), Brookfield Corp. (BN:TSX), Intact Financial Corp. (FC:TSX), WSP Global Inc. (WSP:TSX), CAE Inc. (CAE:TSX), Kinross Gold Corp. (K:TSX) and First Quantum Minerals Ltd. (FM:TSX). On the small-cap side, some tax-loss and repurchase names included Cogeco Inc. (CGO:TSX), Pizza Pizza Royalty Corp. (PZA:TSX), MTY Food Group Inc. (MTY:TSX) and Boston Pizza Royalties (BPF/U:TSX). CIBC said it has previously tracked, on average, a 4.15 per cent return when tax-loss candidates are repurchased.
Price target hikes, holds and starts
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TD Cowen analyst Tim James hiked his price target for Mullen Group Ltd. (MLT:TSX) to $36 from $32 on better than expected third quarter earnings. Shares closed Friday at $28.76.
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ATB Cormark Capital Markets analyst Kalvin Baim started coverage of Parex Resources Inc. (PXT:TSX) with a price target of $35 after a pair of deals made it the largest independent oil producer in Colombia. Shares closed Friday at $30.13.
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TD Cowen analyst R. Scott Siefers has a buy rating on Citigroup Inc. (CI:NYSE) and a price target of US$140 after the company said China granted regulatory approval for the banking giant to establish a wholly-owned securities venture in China. Shares closed Friday at US$120.62.
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UBS Global Research analyst Jospeh Spak hiked his price target for Tesla Inc. (TSLA:Nasdaq) to US$425 from US$391 on the belief shares will "mostly trade with evolving views and sentiment on a potential combination with SpaceX ." Shares closed Friday at US$372.22.
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BMO Capital Markets analyst Jeremy McRea hiked his price target for Spartan Delta Corp. (SDE:TSX) to $18 from $16 on the belief that the market "may still be underappreciating" the scale of the company's inventory, well economics and infrastructure ownership. Shares closed Friday at $14.87.
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National Bank of Canada analyst Baltej Sidhu maintained his outperform rating and $20 price target for Polaris Renewable Energy Inc. (PIF:TSX) ahead of third quarter earnings. Shares closed Friday at $13.90.
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CIBC Capital Markets analyst Tal Woolley started coverage of Loblaw Cos. Ltd. (L:TSX) with a price target of $81 on the belief that the grocery giant is "on the best competitive footing in its history." Shares closed Friday at $68.67.
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Every week, the Financial Post breaks down the most interesting developments in the week's world of investing, from top performers to surprising analyst calls and stocks to have on your radar.
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