Well the first quarter of 2021 has continued to be a rollercoaster ride in the wonderful world of investing. The recovery has been in full swing for the majority of our investments but certain sectors are still lagging behind a little. I will admit, I was fairly confident in my top 5 and bottom 5 picks but seeing how they have preformed the last 3 months has made me think a little extra hard about how well certain sectors would be recovering. I thought that Oil and real estate would take a little longer then they have to recover and boy was I somewhat wrong. I will admit, I did actually expect renewable resources to really take off but they haven’t really moved to much. Either way, I still feel confident in my top 5 picks because there is still 9 months left in the year and as we saw last year a lot can happen in that time.
My top 5 picks for 2021 in order of who I feel will best outperform the TSX.
1. TransAlta Renewables(RNW)$20.63/Share- TransAlta started out strong in the first quarter going up to almost $24.50 a share but has been in a steady decline since. Even though they announced their renewable production increased 19% in 2020 they still have had their price target cut by all the big Canadian banks at the start of march. This really hurt them and has caused them to fall but it makes sense since their Q4 2020 results showed an estimate of $0.29/EPS and they missed with a $0.20/EPS. They have actually missed the estimates for the last 4 quarters in a row. Hopefully they can turn it around and start beating their estimates. They are currently down 2% from the start of the year.
2. Telus(T)$25.39/Share- Telus started out strong like TransAlta but they have had a very volatile sector as of lately. They have really for the most part been preforming quite well and the main reason why they have been lagging as of late is because of their $1.3 Billion equity offering. Which is good for them that they are releasing more shares but as an investor it really dilutes the share pool and causes the price to go down. They have agreed to release 51.3 million more shares. This isn’t the only reason for their wild swings because I feel that the Shaw and Rogers merger has really made investors hesitant to get more into the sector. They are currently up 1% from the start of the year.
3. Nutrien(NTR)$68.42/Share- Nutrien has preformed exceptionally well so far this year. They actually crushed their Q4 2020 last month hitting $0.31/EPS over an estimated $0.22/EPS. Nutrien has also either had their price target held or raised by several financial institutions which is great news especially to start their year. Nutrien also announced last late month that they plan to buy back about 5% of their outstanding shares. Lastly they have also announced they are increasing their dividend $.01 from $.045/share to $0.46/share. This is all great news for investors and I for one hope that they continue with all this positive news. They are currently up 12% from the start of the year.
4. Lightspeed POS Inc(LSPD)$80.82/Share- Lightspeed had hit a high of $104 in Feb which was pretty crazy. They have since been very volatile. Actually, the whole tech sector has seen alot of volatility and selling off as of lately. Their earnings for Q3 2021 were terrible missing their estimate of $0.22/share with $0.50/share. They followed suite with the rest of the tech sector and have been plummeting for the majority of March with a slight recovery half way through but back into plummet mode. They are probably compressed a little right now though because they announced in the middle of March that they are purchasing a company called Vend for about $350 Million which is going to be partially cash and partially voting shares. I still see lots of upside with these guys and have a good feeling for the rest of the year. They are currently down 10% from the start of the year.
5. GFL Environmental Inc(GFL)$44.39/Share- GFL has preformed very well since the start of this year. They have managed to acquire Terrapure Environment LTD(minus their battery recycling business) for aproximately $927.5 Million. So far this year they have also had their price target raised by multiple financial institutions. They did manage to miss on their Q4 2020 estimates of $0.10/EPS by $0.04/EPS. This isn’t that big of a deal because they have fully recovered and then some. I feel like I should have actually put them a little higher on this list considering how well they are doing this year so far. They also have 9 months left to go so lets hope for lots of good news. They are currently up 20% from the start of the year.
My top 5 picks for 2021 in order of who I feel will best underperform the TSX.
1.Air Canada(AC)$26.45/Share- To my surprise Air Canada has actually started to recover past my expectations. They have even had their price target raised by TD which is good news for their share holders. The biggest contributing factor is people that are willing to travel now even with the tight restrictions around it including quarantining in a hotel and taking the covid test before you travel each time. They are only half recovered from their price before the pandemic and still have a long way to go. Maybe its time to get in? They are currently up 16% from the start of the year.
2. Vermilion Energy(VET)$9.47/Share- Vermillion has come storming back so far in this first quarter. They have had MANY price target raises by multiple financial institutions and the price of oil has also helped them begin their recovery. Oil started the year about $48/barrel and is now over $61/barrel which has brought the whole industry back to life. Though, Vermillion along with almost every other oil company still has a LONG way to go. They were over $20/share before the pandemic hit and I doubt they will get there by the end of the year. They are currently up 66% from the start of the year.
3. Aurora Cannabis(ACB)$11.49/Share- Aurora started the year by more then doubling their share price and then half way through Feb they proceeded to tank. They are pretty much back to where they started the year off because of their terrible earning call in Feb. I feel that they are done with their layoffs and are hopefully back on the road to recovery. I feel that this year is going to be very flat for Aurora unless people start to spend more money on “luxury” items for the year of the year. They are currently up 8% since the start of the year.
4. Laurentian Bank(LB)$40.05/Share- I couldn’t have been more wrong with Laurentian Bank. Although they haven’t fully recovered to what they were at before the pandemic they have had an amazing first quarter this year. They crushed their last earnings estimates of $0.74/EPS by $1.03/EPS. I guess their new CEO and the board shuffling has already paid off for them. They have pretty much had their price target raised by every financial institution which is great news for them and their recovery. Much to my surprise I feel that hey will be above where they were before the pandemic last year if they continue with this positive position. They are currently up 28% from the start of the year.
5. SmartCentres REIT(SRU.UN)$26.97/Share- Lockdowns have come and gone so far in the first quarter of 2021. The majority of REITs have kept on a slow and steady uptrend but are no where near what they were at before the pandemic. I feel they are all going to take a long time to fully recover from this. SmartCentres though has done a decent job so far with quite a few price target increases from financial institutions along with some decent earnings so far this year. I know that this year as lockdowns relax and people start going back to work and going back to the mall/shopping REITs will pick up again. They are currently up 16% from the start of the year.
Well, it is safe to say that I was not thinking very clearly when I made my picks because I was wrong more then I was right. That isn’t easy for me to say haha. But in all honesty I am happy that at least the companies that I have picked are moving in the right direction. I know that there is still a long way to get before the end of the year but I still feel that my top picks will perform better then the TSX and really only time will tell. I hope that all the companies I picked have a great bounce back year and they all perform well.
This is all just my own personal opinion on who I feel will overperform and underperform when compared to the TSX. Always do your own due diligence and invest wisely. That is all for today and remember everyone, invest in yourself first.
*Disclaimer, all share prices are after market close as of today April 1, 2021. I currently hold positions in Telus, TransAlta and GFL.