Canadian Competitiveness and Resiliency During a Pandemic

In 2019, Toronto Stock Exchange (TSX) launched the inaugural TSX30 highlighting the power and diversity of investment opportunities in Canada. This year’s rankings, coming in the middle of the pandemic, demonstrate the strength of the Canadian capital markets ecosystem and the ability of Canadian companies to compete globally, despite unique circumstances.

We can unequivocally say that the past 12 months were not what anyone expected. Between global trade tensions, a pandemic and a looming economic recession, issuers and investors alike have been on a roller coaster of a ride. But the broad trend that we have seen emerge is that companies with strong fundamentals ─ companies that have great governance, that understand how to operate, and that prepare for the future ─ are making the most of the economic uncertainty.

Strong TSX Performance Despite the Pandemic

The average 3-year share price appreciation for this year’s TSX30 cohort was 242%, generating a market capitalization increase of $221 billion. Given the drastic impact of COVID-19 on the global economy and markets, these solid results are indicative of the resiliency of Canadian capital markets.

Despite the swift market downturn earlier this year, the markets bounced back with vigor.  This may be a reflection of the liquidity premium for public market investments, due to investors’ easy access to their capital compared to private market investments.   

Perhaps the most encouraging aspect of this year’s TSX30 cohort is the number of repeat performers from 2019. One-third of this year’s top-performing companies were also on last year’s list, including Shopify, which is ranked number one this year (ranked #2 in 2019). This supports the notion that companies with strong fundamentals that excelled pre-COVID can also perform well during times of crises.  

Mining and Technology Dominate

When you look at the rankings this year, two sectors dominate the list: mining and technology. The 14 mining companies had an average 3-year share performance of 223% while the 7 technology and clean technology companies saw an average 3-year share performance of 330%. In fact, 8 of the top 10 companies are from these two sectors.

Although strategy may have played a role, it is more likely that the companies in these sectors were able to better capitalize on the macroeconomic opportunities and trends resulting from the pandemic than others were.

TSX Venture Graduates Make Their Mark

Thirty-two percent of Canadian listed companies started on TSX Venture Exchange (TSXV),  which continues to be a strong engine of growth. This year’s TSX30 features 12 TSXV graduates, a 50% increase over 2019. In addition, six of those graduates are former Capital Pool Companies (CPCs).

TSX30 is a story of how both TSX and TSXV support companies in a continuum, going from early-stage to unicorn. Companies that go through TSXV are often at the idea phase or in early stages of development, and are looking to access capital. Some started as a junior company, raising a bit of capital to initiate their early growth. A few of these companies even made the TSX Venture 50 rankings. As they continued to flourish, they graduated to TSX, widened their shareholder base, raised more growth capital and hit all the milestones; culminating in the pinnacle of success: making our TSX30 rankings!

In other markets around the world, these companies are often considered much too early and do not meet the criteria for what most people think public companies are. As a result, they will likely never get a chance to go public, let alone transition over to the senior exchange and develop this type of momentum.

On the other hand, we believe strongly in the resourcefulness of these companies. As more TSXV graduates make it to TSX30, it speaks to the phenomenal success of our dual exchange system and the importance of our Learning Academy and Growth Accelerator Education programs in helping our companies compete, grow and excel. 

Ultimately, this translates to more investor interest in companies that were previously under the radar, as well as those looking to invest in the next TSX30.

TSX30 is a ranking of the 30 top-performing stocks on the TSX based on 3-year dividend-adjusted share price performance. See the full rankings and methodology at tsx.com/tsx30.

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