Why We Love Canadian Stocks

For the second month in a row, as I was searching the list of top-rated stocks on Motley Fool CAPS, I couldn't help noticing a trend: Investors love Canadian stocks!

It is hockey season, after all
Our neighbors up north deserve the recognition, too. Over the past five years, the iShares MSCI Canada Index (NYSE: EWC  ) has posted 27% annualized returns, much better than the S&P 500.

Increased global demand for commodities such as silver, oil, and copper has helped boost the Canadian markets, and tremendous five-year returns from companies including Oilsands Quest (AMEX: BQI  ) and Barrick Gold (NYSE: ABX  ) hasn't hurt, either.

Is it too late to get in on the Canadian action? CAPS investors sure don't think so. Four of the top 150 stocks on CAPS are headquartered in Canada:

Company

Industry

iShares MSCI Canada Index

ETF

ComptonPetroleum (NYSE: CMZ  )

Oil and gas

Gildan Activewear (NYSE: GIL  )

Apparel/clothing

CAE (NYSE: CGT  )

Aerospace/defense

Source: Motley Fool CAPS, as of March 28, 2008.

Spread the love
Oddly enough, the top-rated stock in all of CAPS isn't a stock at all -- it's an exchange-traded fund, the very one mentioned above. The iShares MSCI Canada Index is a nearly unanimous favorite among CAPS investors: Of the 212 players who have rated it, only one doesn't think it will outperform the S&P 500 going forward.

With top holdings in names such as Suncor Energy (NYSE: SU  ) , EnCana, and Motley Fool Income Investor pick Bank of Nova Scotia, the ETF is heavily weighted in three sectors -- financial services, energy, and materials make up 30%, 29%, 22% of the fund's assets, respectively. As you might imagine, the portfolio has been held up by energy and materials stocks as of late, but with financials showing signs of resurgence yesterday, the banks might finally start pulling some weight as well.

However, the primary reason for bullishness on this ETF, according to CAPS investors, is the promise of Canada's vast natural resources. A few weeks ago, CAPS All-Star TheGarcipian argued that America's dependence on Canadian oil will propel the Canadian economy:

From which country do we import most of our oil? Saudi Arabia? No (but the Saudis are at #2). [Venezuela]? No (they're #4, behind Mexico). Iraq? Iran? Nope. Our dear friends in the Great White North! Yes, Canada at 1.9 million barrels/day in 2002). This is an ETF to track the growth in Canada.

He's absolutely right. In January 2008, the U.S. imported 80 million barrels of black gold from Canada and just 47 million from second-place Saudi Arabia. Combine that steady flow across the 49th parallel with the promise of the Alberta oil sands and the good relations between our two countries, and you have an equation for long-term prosperity.

Not just a great national anthem
Whether it's a bet on the Alberta oil sands, natural resources like timber and silver, or the banks that stand to profit from the commodity boom, Canada has some great stocks that are definitely worth researching.

What do you think about this Canadian ETF, or any stock for that matter? More than 94,000 investors are waiting to hear what you have to say. To make your voice heard, simply sign up for Motley Fool CAPS. It's completely free. 


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Related Tickers

9/30/2014 4:00 PM
ABX $14.66 Down -0.34 -2.27%
Barrick Gold Corp. CAPS Rating: ***
BQI.DL $0.00 Down +0.00 +0.00%
Oilsands Quest, In… CAPS Rating: *****
CGT $5.97 Down +0.00 +0.00%
CAE, Inc. (USA) CAPS Rating: *****
CMZPD.DL $0.00 Down +0.00 +0.00%
Compton Petroleum… CAPS Rating: *****
GIL $54.72 Up +0.03 +0.05%
Gildan Activewear,… CAPS Rating: ***
SU $36.15 Up +0.03 +0.08%
Suncor Energy, Inc… CAPS Rating: ****

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