David Olive: BlackBerry stock popped while CAE dropped — here are this week’s corporate winners and losers

BlackBerry Ltd. (BB.T)

News that the Waterloo, Ont., tech firm has agreed to settle a 2018 patent-infringement lawsuit against Facebook Inc. drew more investor attention to the value of BlackBerry’s patent trove, the largest in Canada. BlackBerry stock popped last week, as well, on news that BlackBerry had sold 90 patents to China’s Huawei Technologies Co. Ltd., world’s biggest telecom-equipment maker. The street has estimated that BlackBerry’s 38,000 patents, which it is trying to sell, are worth about $ 570 million, equal to more than six per cent of BlackBerry’s total shareholder value. But the recent developments suggest the patents could fetch more than that.

MEG Energy Corp. (MEG.T)

Shares of the junior oil producer got a bounce from the Calgary firm’s Jan. 19 announcement that it plans to restructure about $ 760 million of its debt on favourable terms. If its private debt placement succeeds, MEG will have pushed back the maturity date for much of its long-term debt to 2029. The oilsands producer could use that breathing room as prices for its Western Canadian Select (WSC) oil continue to lag the West Texas Intermediate (WTI) and Brent benchmark prices. There is a takeover premium built into MEG’s share price, as investors expect MEG to be a takeover target in the next wave of oilpatch consolidation.

Descartes Systems Group Inc. (DSG.T)

Descartes stock gained on upbeat forecasts for growth in the transportation sector it serves with logistics software and systems, a field in which the Waterloo, Ont.-based firm is a world leader. Descartes’ cargo-tracking systems are used at more than 350 airports worldwide. As a vital cog in the transportation supply chain, Descartes has seen 80 per cent growth in sales and profits in five years. Its stock has more than tripled in value in that time. And Descartes shares soared by more than 30 per cent during the past pandemic year, on the back of continued revenue growth during the recession.


CAE Inc. (CAE.T)

Profit-taking depressed stock in the leading flight-simulator maker and provider of pilot training services. Stock in the Montreal company has more than doubled in value since its 2020 low at the beginning of the pandemic. Taking advantage of pandemic-low valuations for aviation assets, CAE has spent almost $ 200 million on acquisitions in recent months, buying two flight simulator companies and an aviation software firm that widens CAE’s product range. Analysts who are bullish on the stock expect CAE to emerge from the aviation downturn with higher margins due to its aggressive cost cutting and a more formidable competitive lead over rivals after its recent moves to consolidate the industry.

Methanex Corp. (MX.T)

Shares in the Vancouver firm slipped on uncertainties about the strength of the anticipated global economic recovery this year. As the world’s largest producer of methanol, a basic chemical made from coal and natural gas that is a building block in most chemical compounds and an important fuel source as well, Methanex is a proxy for the general economy. Central bankers warned this week that economic recovery might be not be as robust as forecasts suggested after the first reports on the efficacy of COVID-19 vaccines. That uncertainty tempered enthusiasm for the stock, which has more than tripled in value since its pandemic nadir in March.

Precision Drilling Corp. (PD.T)

Investor pessimism about a recovery in oilpatch fortunes kept this bellwether of the oil and gas industry from continuing this week its impressive stock-market recovery. Shares in the leading oil-services firm, based in Calgary, have more than tripled in value since their pandemic low last spring. But share prices drifted lower across the oil and gas sector this week due to the cautionary economic outlook noted above. And incoming U.S. President Joe Biden’s effective cancelation of the Keystone XL pipeline Jan. 20 suggests that the huge U.S. energy market might be launched on a quicker transition away from oil and gas than the industry is prepared for.



David Olive
David Olive is a Toronto-based business columnist for the Star.



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