That being said, let's combine these two theories. On Monday, the world markets looked pretty bad. Gold prices fell more than they had in 33 years, and the TSX/S&P Composite Index plummeted 333 points. The contrarians, of course, would have been buying that day. But what if the contrarians decided to buy only the new highs that day? Surely, going against the crowd and buying the few names that have total disregard for the market¹s sense of gravity is a plan for riches, right?
Perhaps. Let's look at five stocks that hit new heights on the market¹s worst day in a long time.
Dollarama Inc. (DOL/TSX).
Dollarama's stock keeps right on rolling despite the market, Greece, Cyprus and all the other problems in the world. At 20 times earnings, the stock yields a paltry 0.8%, yet it's up 36% in the past year as consumers flock to its bargain stores. Of course, beating earnings estimates every quarter and increasing its dividend by 27% last week doesn¹t hurt the stock either. Worth buying? Analysts expect 18% earnings growth in 2013, so it could be called fairly valued. But DOL will probably ( as usual) blow past those estimates.
Gluskin Sheff + Associates Inc. (GS/TSX)
The money manager hit a new high on Monday, and is up 34% over the past 12 months and 28% in 2013. Gluskin shares yield 3.7%, but paid a 65¢/share special dividend in March. It also increased its regular dividend in November. The company's financial performance has been improving, and 26% earnings growth is expected this year. That all sounds fine, but what interested the market recently was news that the company had been looking at putting itself up for sale. It has, for now, decided to stay independent. But generally, when a company decides not to sell, it is usually just a matter of price before it does. GS probably works a bit higher.
North West Company Inc. (NWC/TSX)
Having a near-monopoly might also help a company¹s shares hit a new high. North West Company shares went against the grain and gained 1.5% on Monday, and the retailer is now up 6% this year and 13% year-over-year. North West serves rural communities in Canada, Alaska, the South Pacific and the Caribbean, and its stores are often the only place in town to shop. At 16 times earnings, it is not a cheap stock, but it yields 4.7% and the dividend was just raised. Earnings growth of 9% is expected this year, on forecasted relatively flat sales.
Newfoundland Capital Corp. (NCC.A/TSX)
This operator of small and medium market broadcast radio stations hit a new high on Monday, up 10% in 2013 and 26% year-over-year. Newfoundland Capital yields 1.8% and while revenue growth is slowing a bit, it looks like the market is anticipating the eventual sale of the company's 32 Western Canadian radio stations. With an improving economy, and a consolidating market, these stations might fetch a decent price.
Andrew Peller Ltd. (ADW.A/TSX)
Finally, maybe some investors were drowning their sorrows on Monday. How else to explain the continued strong performance by this producer and marketer of wine and beer in Canada? Andrew Peller shares yield 2.9% and the dividend grows slowly, as does income. Sales have increased in 41 of the past 43 quarters, and that sort of stability is always attractive to worried investors. Shares are fairly cheap at 12 times earnings, even after rising 25% this year and 29% year-over-year.
Cheers!
Peter Hodson, CFA
CEO of 5i Research Inc
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