There are only a few days left in the year, so it’s time to hand out my investing awards for 2024. They were chosen by a panel of one (me) from securities on our recommended lists.
Stock of the year
Celestica (TSX, NYSE: CLS) For the second year in a row, this Toronto-based tech company has more than doubled in value. In 2023, it ended the year with a gain of 154%. No one expected a repeat performance, but we got one and more. At the close on Dec. 6, it was up 246% year to date. The reason? Consistently strong financial results fuelled by growing demand from large customers. Third quarter revenue was up 22% year-over-year while earnings per share were ahead 60%.
Comeback of the year
Aritzia Inc. (TSX: ATZ). Last year was a nightmare for this Vancouver-based retailer of quality clothing. The shares lost 42%, despite respectable sales growth. The stock was hit by the broad market downturn that year as well as by investor concerns about the impact on Aritzia’s business of growing on-line sales by competitors. But the shares bounced back strongly this year, especially in the second half. As of Dec. 6, the stock was ahead almost 80% for 2024. That’s a turnaround of 122 percentage points from last year.
Disappointment of the year
BCE Inc. (TSX, NYSE: BCE). How did Canada’s largest telecom evolve from being a widows’ and orphans’ stock to a TSX pariah? Bad management, government overregulation, and a lack of transparency will do that. Investors were shocked when BCE sold its position in Maple Leaf Sports and Entertainment to Rogers and then turned around and spent the proceeds on a US fibre optic company. No one saw that coming. So, now we have a deeply indebted company with a dividend that may be unsustainable (10.5% yield) that has committed itself to expanding into the US. No wonder the widows and orphans are fleeing. The share price is down 27% this year.
Cash cow of the year
Firm Capital Mortgage Investment Corporation (TSX: FC). There are companies that offer a higher yield (including BCE). But income-oriented investors want dependability and minimal risk. Firm Capital fits the bill. The company has paid a monthly distribution of $0.078 since July of 2007, never changing it through good times and bad. There’s usually a top-up bonus added at year-end, and the company says to expect one this year. Firm Capital is conservatively managed and specializes in high-quality residential first mortgages. Nothing exciting about it. Just predictable, steady cash flow.
Surprise of the year
Manulife Financial (TSX, NYSE: MFC). For years, Manulife stock bumped along in the $25-$30 range. It was generally seen as an unexciting insurance stock with a reliable dividend but little upside potential. But last February the shares finally broke out and since then there has been no looking back. As of Dec. 6, the stock was ahead 56% for the year as the company’s Asia business boomed. That’s a big move for a staid financial company that has been around since 1887. Plus, there’s a decent dividend with a 3.5% yield.
Sector of the year
Information Technology. All year long we’ve been hearing about how The Magnificent Seven have been driving the Nasdaq and S&P 500 to record levels. Canada’s tech sector is too small to have the same level of influence on the TSX, but it’s more than pulling its weight. The sector is ahead 39% for the year, well ahead of the TSX Composite, which has gained 22.6%. No other sector is even close. Leading performers are Celestica (+246%), Shopify (+62%), Descartes Systems (+54%), and Constellation Software (+43%).