Monthly review January 2020

Basic materials Sector

Cascades was awarded a Grand Prix DUX, rewarding success in the food industry every year, in the “Products” category for its innovation in meal packaging for the creation of a 100% recycled and recyclable cardboard tray.

This food packaging is the first in its kind in North America, it is distinguished by the use of a water-based functional barrier that protects it from humidity and that increases the performance of the packaging without reducing the recyclability of the cardboard, this technology has been patented. In addition, this tray is made in Quebec.

This packaging has received two other awards since its launch in 2019: the 2019 Food Innovation Award from the Conseil de la transformation alimentaire du Québec (CTAQ), and the 2019 Gaïa Award in the final result and vegetables category.

 Industrial Sector

600M $CAN of Senior Notes for Waste Connections

Waste Connections (TSX: WCN) announced on January 21,2020 that it has priced an underwritten public offering of 600M $CAN in aggregate principal amount of 2.60% Senior Notes due 2030 at a price to the public of 99.99% of their face value. The offering will be completed on January 23, 2020, subject to customary closing conditions. Net proceeds to Waste Connections from the offering will be be approximately 594M $CAN, after deducting underwriting fees and estimated offering expenses. It is expected to be used to repay a portion of borrowings and for general corporate purposes.

Consumer Cyclical Sector

Coronavirus Infects Stock Market

The rapidly spreading coronavirus in China has now infected the global stock market in the last days of January. Fears that the coronavirus will slow down the global economy caused several stocks in different sectors to fall. 

In the cyclical consumer sector, companies with operations in China saw their stock decline in value. Indeed, as described by Stéphanie Grammond of the newspaper Lapresse, if Chinese consumers remain locked in their homes for too long, multinational retail companies will be negatively affected. On Friday afternoon, January 31, Canada Goose Holdings [GOOS.TO] is down 6%, Gildan Activewear [GIL.TO] is lower 4% and Dollarama [DOL.TO] is declining 3.2%.

Energy Sector

The energy sector at the bottom of the US market

The energy sector ranks last behind the 10 other sectors of the S&P 500, in terms of Y/Y on last quarter’s. Indeed, the energy sector experienced a drop of 42.5% in the last Q4. For the full year 2019, the energy sector also ranks last in terms of yield growth, with negative growth of 30.5%. Analysts who hoped to see a sharp rise in the price of oil by the end of 2019 were disappointed, as the latter experienced a slight increase towards last December, then fell by 18.6% since the last month.

Technology Sector

Shopify to open new permanent office in Vancouver

On January 28th, Shopify (TSE : SHOP)  announced its intention to open its first permanent office in Vancouver and hire 1 000 people by the end of the year. This new 6,5K square meter workspace will replace the temporary rental space that the Ottawa company currently uses in Vancouver. With this approach and the intention to find the best team in terms of RnD, Shopify moves forward on its goal to expand and better face competition.
We are left to wonder if these new employees will be working on deploying the distribution network center that Shopify wants to put in place in order to compete with Amazon.

Communication Services

This Wednesday, January 29, was the 10th edition of the “Bell Let’s Talk” event. Since its inception, this initiative taken by the Bell company (BCE) has raised more than $ 11 million in donations for causes working in the field of mental health and has reached 3,409,680 Canadians suffering from mental problems.

Although the event has a higher participation rate after each year, an increasing number of people emphasize the publicity of the event. The company, in addition to having its name on everyone’s lips, associates its name with a beneficent cause. It would seem profitable for companies to organize this type of event, since it is seen among competitors, such as the anti-cyberbullying project initiated by Telus.

Bell Let’s Talk is one of several projects the company has undertaken to ensure its ubiquitous presence in the Canadian media. One can think of the shares she has in Canada’s professional hockey teams.

Consumer Defensive Sector

Concerns about Coronavirus

TSX has had its worst day in four months due to concerns about the coronavirus. Therefore, investors head for the consumer defensive sector during the day as they fluctuate less than the market. So companies like Pfizer, Walmart, Johnson & Johnson and Procter & Gamble were among the top titles of the day. These companies are generally less volatile in crisis situations.

Utilities Sector 

The niche market of renewable energies

Often seen as a sure and stable sector, the utilities sector is undergoing a transformation in Canada. While the demand for energy is tending to stabilize, the demand for clean energy tends to grow compared to fossil fuels. This new trend translates into greater investment in companies using renewable energy as sources. Although this sector can be attractive to minimize portfolio risk, the returns of several companies in this niche market have outperformed the Canadian index. Stocks such as Algonquin Power & Utilities Corp, Boralex Inc. and Transalta Renewables stood out with returns in excess of 30% since last year.

 Bibliography 

Alex Kimani (2020). Yahoo Finance. Energy Stocks Rout On Poor Earnings. Tiré de :  https://finance.yahoo.com/news/energy-stocks-rout-poor-earnings-220000868.html?.tsrc=fin-srch

Markets Insiders (2020). Oil (WTI) Price Commodity. Tiré de : https://markets.businessinsider.com/commodities/oil-price?type=wti

Cascades. (30 Janvier 2019). CASCADES’ NEW 100% RECYCLED AND RECYCLABLE CARDBOARD TRAY WINS A GRAND PRIX AWARD FROM DUX. From : https://www.cascades.com/en/media-centre/press-releases-and-news/press-release/2020/6277/cascades-new-100-recycled-and-recyclable-cardboard-tray-wins-a-grand-prix-award-from-dux

Les Affaires. (29 janvier 2020). Titres en action: CGI, Apple, CN, Shopify… Tiré de https://www.lesaffaires.com/bourse/nouvelles-economiques/titres-en-action-cgi-apple-cn-shopify/615526

CBC. (28 janvier 2020). Shopify plans to hire 1,000 workers and open a Vancouver office by year’s end Social Sharing. Tiré de : https://www.cbc.ca/news/canada/british-columbia/shopify-hire-workers-vancouver-1.5443226

Grammond, S. (2020, 01). La Bourse attrape le coronavirus. La Presse. Tiré de: https://www.lapresse.ca/affaires/202001/27/01-5258520-la-bourse-attrape-le-coronavirus.php

RTTNEWS. (2020, 01). Canadian Shares Losing Ground As Coronavirus Fears Rise. Nasdaq. Tiré de : https://www.nasdaq.com/articles/canadian-shares-losing-ground-as-coronavirus-fears-rise-2020-01-31

PR Newswire. (30 janvier 2020). Waste Connections Announces Pricing of $600 Million of Senior Notes. [En ligne]. Disponible : https://www.prnewswire.com/news-releases/waste-connections-announces-pricing-of-600-million-of-senior-notes-300990717.html

CNBC. (27 janvier 2020). Stock market live updates: Dow down 450, biggest coronavirus losers, oil bear market. [En ligne]. Disponible : https://www.cnbc.com/2020/01/27/stock-market-today-live.html

Yahoo Finance. (27 janvier 2020). TSX has worst day in nearly four months on concerns about coronavirus impact. [En ligne]. Disponible : https://ca.finance.yahoo.com/news/north-american-stock-markets-tumble-145144170.html

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