Markets

Canadian Indexes Unmoved by Saudi Backlash: 3 Stocks to Buy

Canada's market indexes took a dip on Aug 8, following a report that Saudi Arabia has started to get rid of its Canadian assets since Aug 7. A diplomatic dispute over human rights triggered the action taken by Saudi Arabia. However, the recovery of the stock indexes since then doesn't indicate a major impact on the Canadian markets.

A report by Financial Times on Aug 8 stated that the desert kingdom's asset managers have been instructed by the country's central bank and state pension funds to sell Canadian stocks, cash and bonds beginning Aug 7.

Adel Al-Jubeir, Saudi Arabia's foreign minister, said on Aug 8 that the country's upcoming retaliatory measures could hinder investment flows between the two nations. The Saudi Arabia central bank and state pension funds immediately started disposing Canadian assets. As the report surfaced on Aug 8, it affected the Canadian dollar temporarily, although stocks and bonds witnessed a slight change.

It seems unlikely that Saudi Arabia's penalties on Canada are going to cease anytime soon since the former has refused mediation in the conflict. However, as the impact on Canadian stock markets is not expected to be significant, one could take advantage of the attractive entry points of some Canadian stocks with solid prospects.

Canada Firm on Human Rights

Tensions between the two countries began with a tweet on Aug 2 by Canada's foreign minister Chrystia Freeland, in which she called for the release of Saudi women's rights activist Samar Badawi, who is confined in prison in Saudi Arabia. Samar's brother, blogger Raif Badawi, was arrested in 2012 for insulting Islam in his blog and sentenced to 10 years in prison and 1000 lashes. Raif's wife Ensaf Haidar is now a Canadian citizen and fights for his freedom.

In response to Freeland's tweet, the Saudi Arabian government expelled the Canadian ambassador, recalled its ambassador from Canada, froze new investments between the countries, stopped importing Canadian grain, ordered the return of thousands of Saudi students who are studying in Canada's schools, halted flights by Saudi Arabian Airlines to Canada, suspended all medical treatment programs in the North American country, and is now selling off its Canadian assets.

The desert kingdom has been firm on its conservative ideologies, tweeting on Aug 9 that the country doesn't accept interference in its internal affairs. The country also said that the arrests were a matter of "national security" rather than human rights.

Canada's Prime Minister Justin Trudeau said on Aug 8 that the country will "remain firm" when it comes to human rights. He also told that Freeland had explained to Jubeir that Canada doesn't want poor relations with Saudi Arabia. As of now, diplomatic talks continue between the two nations.

Oil Supplies to Remain Unhindered

Although Saudi Arabia is taking retaliatory measures against Canada, the country's Energy Minister Khalid al-Falih stated on Aug 9 that the country's oil supplies to Canada will not be hindered by the dispute. Saudi Arabia, the world's largest exporter of crude oil in 2017 ($133.6 billion oil exports), said that it has a "firm and long-standing policy" that oil supplies will not be affected by "political considerations."

Canadian Indexes Slide but Rise Steadily

Following the news on Aug 8, which said that Saudi Arabia was selling off its Canadian assets since Aug 7, Canada's S&P/TSX Venture Composite, S&P/TSX 60 and S&P/TSX Composite indexes immediately took a plunge. But since then, all the three indexes have been recovering gradually.

3 Canadian Stocks to Buy Now

Despite the ongoing dispute, the Canadian stock market has held its ground much like Trudeau's decision to stand up for human rights in the country and elsewhere in the world.

Here are three Canadian stocks that may have declined since Aug 8, but hold the potential to move higher.

Headquartered in Vancouver, Canada, Amerigo Resources Ltd. ARREF produces and sells copper and molybdenum concentrates in Chile primarily. This Zacks Rank #2 (Buy) company's consensus earnings estimate has revised 50% upward for the current year over the last 30 days. Shares of Amerogi have declined 3.8% since Aug 7. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Canada Goose Holdings Inc. GOOS is a manufacturer of winter clothes and is headquartered in Toronto, Canada. The Zacks Consensus Estimate of this Zacks Rank #2 company hasn't changed for the current year over the past month. The company's stock price has declined 1.7% since Aug 7.

Energy Fuels Inc. UUUU is based in Toronto. It mines, produces and develops vanadium and uranium. Shares of this Zacks Rank #2 company have declined 8.3% since Aug 7.

Wall Street's Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It's a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Amerigo Resources Ltd. (ARREF): Free Stock Analysis Report

Energy Fuels Inc (UUUU): Free Stock Analysis Report

Canada Goose Holdings Inc. (GOOS): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

UUUU GOOS ARREF

Other Topics

Stocks

Latest Markets Videos