Energy transition the big theme among the TSX’s top performers

A newly released ranking of the Toronto Stock Exchange’s top performers shows investors continue to be attracted to companies at the forefront of the energy transition.

The TSX30 is an annual list of the top-performing stocks on Canada’s main stock exchange over a three-year period, based on dividend-adjusted share price performance.

The 2024 edition of the list, released Tuesday, is dominated by three sectors — oil and gas, industrial products and services, and mining. Together, these sectors account for 25 of the 30 companies on the list.

“It’s a theme that we saw last year too,” said Toronto Stock Exchange CEO Loui Anastasopoulos, adding most of the winning companies are either energy companies themselves, or poised in some way to support the energy transition.

“Energy industry companies make up more than half of the TSX30 this year — 16 of the 30,” Anastasopoulos said.

“Half of the mining companies included in the ranking also focus on base metals, which are also crucial for the energy transition (as components in) EVs, batteries, and low-carbon renewable energy.”

One theme in this year’s list is electrification, with strong performance from companies building the infrastructure to support the growth of clean power capacity.

The top-ranked company this year is Hammond Power Solutions Inc., an Ontario-based company that builds custom transformers for alternative energy systems such as wind power and co-generation. The company has seen its dividend-adjusted share price soar 928 per cent over the past three years.

“I think the world is seeing that we really need to have resiliency in our power grids, and that means that investors are probably looking at it too,” said Hammond Power CEO Adrian Thomas.

“It won’t happen overnight, but there’s a big long-term trend happening … and it’s attracting a lot of investment attention.”

In second place this year is Toronto-based Celestica Inc., a company that offers solutions for grid stability and EV infrastructure. The company saw a 706 per cent increase in its dividend-adjusted share price.

In the mining sector, companies like Saskatoon-based uranium company Cameco Corp. — which is in the 14th spot on this year’s list — are benefiting as the energy transition drives an uptick in demand for certain commodities. Cameco, for example, has seen renewed interest from investors due to the growing global demand for nuclear energy as a clean, emissions-free energy source.

Anastasopoulos said while the energy transition is still in its early phases, energy security and reliability remain top of mind globally, which is why investors were still drawn to traditional oil and gas companies in 2024.

Among this year’s TSX30 winners are Athabasca Oil Corp. — which nabbed third place with a 429 per cent three-year share price appreciation — as well as NuVista Energy Ltd., MEG Energy Corp. and several others.

“Specific (oil and gas) companies … are really driving investor returns by providing reliable energy supply,” he said.

“They’re good companies, with good cash flow, and they are a much-needed driver of what the Canadian economy is trying to do.”

This report by The Canadian Press was first published Sept. 10, 2024.

Companies in this story: (TSX:HPS.A, TSX:CLS, TSX:CCO, TSX:ATH, TSX:MEG, TSX:NVA, TSX:GSPTSE)

Amanda Stephenson, The Canadian Press