Since early April, the S&P/TSX Composite Index has been trading sideways, largely between 21,500 and 22,500. This consolidation comes after the Index posted an impressive 18 per cent gain that started in November and ran until early April. Now, with the second quarter earnings season fast approaching, a key question is whether earnings results can reignite momentum in the stock market.
Currently, the S&P/TSX Composite Index is trading at a reasonable valuation with room to expand should companies report solid earnings results with positive outlooks. According to Bloomberg, 8 per cent earnings growth is anticipated over the next year for the S&P/TSX Composite Index. The forward 12-month price-to-earnings ratio currently stands at 14.5, which is below the 10-year historical average multiple of 15.6 times.
Ahead of the earnings parade, here’s a look at analysts’ target prices, recommendations, forecast returns and yields for all 226 securities in the S&P/TSX Composite Index grouped by sector and ranked according to their expected price returns . The posted target price for each security is an average of all available target prices from analysts.
It’s important to note that high target prices, which imply stellar returns that seem unbelievable may be just that - unrealistic. At times, when a stock price falls analysts may maintain their bullish expectations, inflating the forecast return. In addition, an outlier can skew the average target price, to the upside or downside, particularly when the number of analysts covering a stock is low.
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