Monday, July 28, 2008

Best value beaten-up commodity stocks

From the Financial Post:

Crude oil has fallen as much as 15% from its peak, natural gas has lost a third of its value and gold has dipped more than 7%. Energy and materials stocks in the Canadian equity market meanwhile, have taken part in the downtrend with declines of 19.3% and 15.4% from their recent peaks, respectively.

But they failed to fully engage in the upside for commodity prices during the second quarter, Merrill Lynch Canada strategist David Wolf said in a recent report titled “Commodity stocks if the run isn’t done.”

He expects further weakness in these sectors going forward, which is a primary reason for his bearish call on the S&P/TSX composite index.

However, Mr. Wolf said he continues to hear from international clients looking for an entry point into Canada’s commodity boom.

So since not everybody is as bearish as Merrill, they thought it was worth a look at the TSX materials and energy sectors for stocks that are off more than 20% from their peaks, are Buy-rated, and have better-than-average earnings momentum....MORE