Thursday, July 13, 2006

RBC CM Best Equity Investment Ideas for 2006 H2

The Globe and Mail, Angela Barnes, 13 July 2006

RBC Dominion Securities Inc. has added a number of new names, including Focus Energy Trust, Canadian Natural Resources Ltd. and Nova Chemicals Corp. to its list of "best ideas" in stocks for the second half of 2006, while dropping another 14 names that were in the first half list. The best ideas list, which was first compiled at the beginning of last year, has substantially outperformed the market over the intervening period. It has delivered a total return of 29.3 per cent on an annualized basis since inception, compared with a 18.7-per-cent return in the S&P/TSX composite index over the same period.

Other additions to the list, which feature RBC Dominion analysts' top picks for the next six months in the sectors they follow, include AEterna Zentaris Inc., Anatolia Minerals Development Ltd., Atrium Biotechnologies Inc., Banro Corp., Calfrac Well Services Ltd., Chartwell Seniors Housing REIT, MacDonald Dettwiler & Associates Ltd., Murchison Metals Ltd., Shoppers Drug Mart Corp., Shore Gold Inc., Trimac Income Fund and West Fraser Timber Co. Ltd.

As some of the names suggest, the list is dominated by small- to mid-capitalization issues, but there are a number of larger issues there for balance, including Manulife Financial Corp. and Toronto-Dominion Bank that RBC Dominion believes offer a very attractive risk/return profile. The list as a whole is intended for more sophisticated and risk tolerant investors, said Richard Talbot, director of Canadian equity research. It is not designed for the "widows and orphans" type investors because of the higher risk and volatility entailed in some of the stocks. Higher risk can mean higher returns.

There are a number of stocks on the list that are not those of Canadian companies. Mvelaphanda Resources Ltd., a holdover from the first-half list, is one such example. The South African company has direct equity interests in gold, precious metal and diamond operations in South Africa and Angola. Zinifex Ltd., an Australian company that is a major producer of zinc and lead, is another. It too was a holdover from the earlier list.

Among the better-known stocks mentioned in the first half list but not the latest list were Petro-Canada and Mega Bloks Inc.