- Even Canadians are wrong about Canada.
- Imperial Oil is a picture of relative strength.
- This new trend is here to stay.
It was Wednesday afternoon, and I was shooting an interview with the talented Catherine Murray.
Off camera Catherine said to me, “You’re not investing in Canada, right?”
“You bet I am. Imperial Oil is the best Energy stock in the world!”
She almost fell out of her chair.
Catherine definitely didn’t see that one coming.
But it’s true.
And it’s not just Imperial Oil (IMO).
Canada is much more than America’s hat…
See the Relative Strength
My friend Catherine is a former anchor at Canada’s Business News Network (BNN), which later became BNN Bloomberg.
Before she went in front of the camera full-time, she was doing institutional sales and trading at Goldman Sachs, and then Deutsche Bank after that.
Catherine and I have been doing interviews for the better part of a decade.
She knows her stuff. She’s great.
Here we are back in the summer of 2018:
I was shooting right from the lobby at Bloomberg HQ, a massive building on Lexington Avenue in Midtown Manhattan.
And here we are LIVE in the Toronto studios in 2017:
Catherine and I were hanging out in Toronto this fall and had a ton of back and forth about the markets.
We caught up recently for another great conversation.
She couldn’t believe what I had to say about IMO.
But look at this thing:
Tell me you know of any large-cap Oil & Gas stock that looks this good and is already making new all-time highs.
They don’t make many Oil & Gas stocks like this. I dare you to try to find one.
We call this relative strength.
When a stock is outperforming all its peers, by such a large margin, that’s evidence of leadership.
We want to own leaders.
Oh, Canada
Imperial Oil is a $40 billion Energy company based in Calgary.
What’s happening in the rest of Canada also stands out.
Remember, Canada’s stock market is very different from the U.S. stock market.
For example, Technology represents only 9% of the S&P/TSX Composite Index.
Tech is more than 30% of the S&P 500.
Canada has 16% Energy. The S&P 500 has 3%. The Dow Jones Industrial Average has a 2% Energy weighting.
Materials have a 13% weighting in Canada. In the U.S., it’s 1%.
Financials are 13% of the S&P 500 and 0% of the Nasdaq100.
For a little more perspective, Financials represent 33% of the S&P/TSX.
It doesn’t make one better than the other. They’re just different.
Very different, in fact.
During some markets, one index will massively outperform the other. And then many times that flips, depending on where we are in the cycle.
This year, the iShares MSCI Canada ETF (EWC) is up more than 13%. The SPDR S&P 500 ETF (SPY) is up 4%.
Take a look at new all-time highs for Canada:
But, from the beginning of 2023 and through 2024, Canada was only up 28%.
During that same two-year period, the S&P 500 was up 57%. And the Nasdaq100 nearly doubled in value.
See the difference?
There’s a time and a place for everything.
This year has been Canada’s time. The types of stocks that drive its market have been leaders everywhere.
And I see more and more opportunities coming from the Great White North.
Think Natural Resources… Industrials… Financials.
Canada had made little to no progress since the Great Financial Crisis.
So this trend is new, and it’s likely here to stay.
No one thinks it can happen.
Even the great Catherine Murray was surprised at my enthusiasm about Canadian stocks.
Everyone’s wrong.
This time it’s about Canada.
I like it.
Stay sharp,
JC Parets
Founder, TrendLabs