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Dec 12, 2017

TSX ends higher, with health care stocks leading the way

TSX

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A motley crew of stocks led the TSX Composite’s run to a new record intraday high. Canada’s benchmark index rose to 16,133.23 at 9:33 a.m. ET on Tuesday, eclipsing the previous record set Nov. 7 of this year. The TSX ended up 10.52 points, or 0.07 per cent, at 16,114.03. Here’s a snapshot of the TSX’s top performers since the last peak.

Valeant Pharmaceuticals: +51.6%
Nexgen Energy: +37.3%
Home Capital Group: +27.5%
Cott Corporation: +21.2%
Cameco: +19.8%

VALEANT PHARMACEUTICALS (VRX.TO)

Drugmaker Valeant Pharmaceuticals tops the list of the best performers on the composite since the previous Nov. 7 peak. The company has been aggressively paying down debt under Chief Executive Officer Joe Papa, eclipsing its goal to trim US$5 billion worth of debt by February 2018. Valeant has bought itself some breathing room, with none of its bonds reaching maturity until after the end of the decade. Under former Chief Executive Michael Pearson, the company went on a debt-fuelled spending spree to finance its aggressive growth-by-acquisition roll-up strategy.

NEXGEN ENERGY (NXE.TO)

Nexgen Energy got a lift from a pair of unlikely sources, with uranium production cuts out of Kazakhstan and Cameco giving uranium stocks a long-awaited boost. Nexgen, which as an exploration-stage company doesn’t have revenue and has historically posted operating losses, does have a high-grade deposit in Saskatchewan’s Athabasca basin. The stock surged in the wake of Kazakhstan’s Kazatomprom’s decision to slash production by 20 per cent for the next three years in a bid to put a floor beneath battered commodity prices.

HOME CAPITAL GROUP (HCG.TO)

Alternative mortgage lender Home Capital returned to profitability in the third quarter, after the crisis of confidence battered its books in the first half of the year. The company posted a $0.37-per-share profit in Q3, though new loan originations plunged 85 per cent to $385 million from $2.4 billion a year ago. The company has gotten pickier about the loans it underwrites under new Chief Executive Officer Yousry Bissada, who told investors on the company’s earnings call that Home Capital turned down about 70 per cent of the applications that crossed its desk in the third quarter.

COTT CORPORATION (BCB.TO)

Beverage-maker Cott booked the bulk of its gains in just two trading sessions, rising 10 per cent from Nov. 8 to Nov. 10, in the wake of a third-quarter revenue beat. The company has been cycling away from its traditional soft drink business, focusing instead on coffee, water and tea. Cott saw comparable revenue in that division rise seven per cent in the latest quarter.

CAMECO (CCO.TO)

Much like Nexgen, Cameco shares gained some strength after Kazatomprom cut production. Kazakhstan’s cut actually followed a similar move made by Canada’s largest uranium producer, after Cameco announced plans to shut down production at the McArthur River mine and Key Lake processing facility for 10 months in response to persistently weak uranium prices. Cameco temporarily cut 845 jobs as a part of the move, and Chief Executive Officer Tim Gitzel told BNN he sees no compelling reason to “invest even a dime” in new production until market conditions improve. 

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