The TSX remains tentative almost three months into the year, with more inflationary uncertainty to follow.
The index has gained 5.8 per cent year to date but has shed over 3 per cent YoY.
This is because, despite the Bank of Canada’s (BoC) historically hawkish interest rate increases, the Canadian economy has shown a resiliency that points to the need for further tightening.
The most recent evidence of this resilience is in producer prices, which rose by 0.4 per cent in January, overshooting the consensus of a 0.1-per-cent decrease.
Additionally, December grocery prices were 11 per cent higher YOY, and the economy added an unexpectedly strong 150,000 jobs in January.
Canadian consumer spending is also showing no signs of slowing down, with restaurant and travel purchases remaining steady over the past year, despite wages lagging inflation and Canadians carrying more average household debt than discretionary income.
While the BoC sees higher borrowing costs eating their way further into household spending over the course of the year, as well as making businesses less competitive as they struggle to pass on fair price fluctuations to their clients, the guiding light for investors has not changed since rates began to rise: companies with established value propositions offer the best probabilities of outsized returns.
Until the prices of goods and services revert to historical averages – the BoC sees inflation falling to 3 per cent in mid-2023 and back to 2 per cent in 2024 – story stocks with little in the way of cash-generation potential will continue to take a backseat to companies whose hard numbers and demonstrably prospective assets can substantiate investors’ belief in their futures.
This thesis is illustrated by three of our most viewed stories of the week, which focus on companies in energy, mining and tech with clear paths to generating shareholder value:
Trillion Energy (CSE:TCF) begins drilling West Akcakoca 1 Well lateral section
Trillion (TCF) is now drilling the West Akcakoca 1 Well’s lateral section at the SASB Gas Field offshore Turkey.
After West Akcakoca 1 is drilled to total depth, the company will perforate it for production alongside its Guluc 2 Well.
CEO Arthur Halleran sat down with Coreena Robertson to discuss the news.
The company’s ongoing natural gas production is now closer to an essential service, given Turkey’s recent earthquakes. As the country rebuilds its fuel supply chains and western countries continue to shun Russian cruse, Trillion is set up to collect a premium on its product as more wells come online.
Its gas revenue for December reached US$2,342,633 after royalties, which is up from US$1,235,564 in November.
Trillion Energy International (TCF) has added over 157 per cent over the past five years, having capitalized on energy’s resurgence from the pandemic to the present day.
Eloro (TSXV:ELO) outlines extensive IP conductivity anomaly on Casiterita Property
Eloro Resources (ELO) has outlined an extensive IP conductivity anomaly on the Casiterita Property.
Casiterita is adjacent to the company’s Iska Iska Silver-Tin Polymetallic Project in Bolivia.
Drilling and surveying are in progress to test for a potential major tin porphyry south of Iska Iska on the Casiterita Property.
Bill Pearson, Eloro’s Executive VP, sat down with Coreena Robertson to add context to the news.
Recent results from the company’s flagship Iska Iska Project include 202.43 g Ag eq/t (69.80 g Ag/t, 1.21 per cent Zn, 0.49 per cent Pb and 0.12 per cent Sn) over 325.48 m, including a higher-grade portion of 395.98 g Ag eq/t (182.02 g Ag/t, 1.73 per cent Zn, 0.97 per cent Pb, 0.18 per cent Cu and 0.19 per cent Sn) over 109.60 m.
Definition drilling has more than doubled the potential volume of high-grade mineralization for the mineral resource.
Eloro’s track record of significant results from Iska Iska puts it on a trajectory toward a major discovery while operating at an early enough stage to justify a long-term position, subject to due diligence, which may benefit from short-term metals exposure to smooth out the journey toward lower inflation.
Eloro Resources (ELO) is up by 280 per cent over the past five years, while it has lost approximately 12 per cent over the last year in line with the levelling off of post-pandemic industrial demand.
Datametrex AI (TSXV:DM) subsidiary Nexalogy to introduce AI product, Analytics GPT
Datametrex subsidiary Nexalogy Environics is scheduled to present its new and innovative AI product, Analytics GPT, later this month.
Analytics GPT (Generative Pre-Trained Transformer) uses advanced AI algorithms to analyze text and speech patterns in real-time.
Marshall Gunter, CEO of Datametrex, met with Coreena Robertson to discuss the news.
Datametrex’s exposure to artificial intelligence, machine learning, telehealth and the electric vehicle market, as well as its overall profitability, afford it ample protection against darkening global economic sentiment.
The Market Herald recently evaluated the company’s investment prospects in the inaugural edition of The Cash-Rich Report, which profiles profitable companies fortified against a multitude of headwinds.
Datametrex AI (DM) is up by over 71 per cent year to date, though it has lost over 42 per cent over the past five years. The stock represents a bargain play with positive momentum, again subject to each investor’s own due diligence process.