(January 13 – 16:00 ET) — Stock prices of many of Canada’s “old economy” companies will surge in the coming years because the firms have adapted to changing times and formed a clear international strategy, says an executive of Investors Group.
While many Canadian investors are pondering increasing their foreign exposure they should actually be giving many domestic issues a solid look, Scott Penman, president of I.G. Investment Management, said in a speech to the Empire Club in Toronto.
“The reason that Canadian investors may be looking elsewhere is a natural tendency to lose sight of their long-term plans because of the immediacy of short-term results,” he said. “And that’s too bad, because it means you are falling into the trap of buying high, and selling low.”
Penman said foreign investors have noticed the Canadian market is undervalued and increased their investments in domestic issues by 83% in the past six years.
Companies that Penman sees “flourishing over the next several years” because they have adapted to the globalization of the economy include Nortel Networks, Alcan Aluminium Ltd., Toronto-Dominion Bank, Bombardier, CN Rail, Seagram Co., Thomson Corp. and Magna International
“Although some might see them as ‘old economy’ stocks, I see them as important companies to hold because of the big role they play in the new economy. In fact, I don’t care so much if a company is old economy or new economy, but moreso if the stock is cheap and has a good potential for growth,” Penman said.
IE Staff