Get Northern Exposure With These 8 Canadian Stock Picks for 2019

Each January, MoneyShow.com asks the nation's top financial newsletter advisors for their favorite stock picks for the year ahead. For 2019, seven experts look to Canada-based firms, which, not surprisingly, lean toward commodity and mining plays. Frank Holmes, U.S. Global's Frank Talk Investors find royalty and streaming companies such as Wheaton Precious Metals attractive for a number of reasons, not least of which is that they have exposure to commodity prices but face few of the risks associated with operating a mine. Developing a mine property to start producing gold or other precious metals is an expensive, often time-consuming process. Infrastructure needs to be built out, permits applied for, laborers hired and more. A royalty company serves as a specialized financier that helps fund exploration and production projects for cash-strapped mining companies. In return, it receives royalties on whatever the project produces, or rights to a stream, an agreed-upon amount of gold, silver or other precious metal. With operating costs mounting and metals still at relatively low prices, royalty and streaming companies have become an essential source of financing for junior and undercapitalized miners. Royalty companies also hold a more diversified portfolio of mines and other assets than producers, since acquiring new streams doesn't require any additional overhead. This helps mitigate concentration risk in the event that one of the properties stops producing for one reason or another. With only around 30 employees, Wheaton Precious Metals has one of the highest sales-per-employee rates in the world. According to FactSet data, the company generates over $23 million per employee per year. More recently, Wheaton announced that it had finally settled its ongoing tax dispute with the Canadian Revenue Agency over international transactions between 2005 and 2010. Benj Gallander, Contra the Heard Quarterhill , our top pick for growth stock investors in 2019, operates in two areas. The enterprise focuses on the internet of things and has been acquiring technology companies. The bread and butter, though, has been licensing patented technologies and engaging in lawsuits when companies are violating those patents. Quarterhill won a lawsuit against Apple for $145 million. Apple is appealing and under normal circumstances if the process goes the distance, it could take about 18 months. It is possible that a settlement will be reached, eliminating the need for further legal activity. Meanwhile, the corporation is engaged in another 40 lawsuits or so. It does license technology to over 350 companies. Quarterhill continues to be on the prowl for acquisitions. With almost $60 million in the kitty and a minimal debt load of about $6 million, one or two are expected in 2019. In our long conversation with the relatively new CEO Doug Parker, he made it clear that he is seeking deals that would be immediately accretive. In his previous position as a Senior VP of Open Text Corp. , he was a key driver in the takeover or businesses with revenues of around $2.5 billion. One particular reason that the firms that Parker chases appreciate him is that he leaves decision-making authority largely in the hands of the management of the obtained firms. Parker feels that gives Quarterhill a good skill set and makes for a functional corporate family. The stock currently trades at around $1.00 USD. It is our feeling that it could become a $5.00 stock. Back in its heyday it traded well above that level. Alan Newman, Crosscurrents Our favorite speculative play for several years has been IAMGOLD Corp. , a gold exploration and mining company with mines in North America, South America and in West Africa. The company's headquarters are in Toronto, Canada and the firm has interests in at least ten operations that we are aware of, including copper and silver. The shares traded as high as $23.88 in September 2011, in concert with the peak in bullion prices over $1,900 per ounce. Since our long-term forecast places gold eventually as high as $3,000 to $3,500 per ounce, we believe IAMGOLD has the potential to trade above the 2011 highs, possibly well beyond. Although we consider the shares to be speculative, valuations appear to be reasonable. The shares currently trade at roughly a 1.5 price-to-sales ratio and the forward price-to-earnings ratio is about 26. Total cash per share is $1.53 while total debt per share is $0.89. IAMGOLD rallied from similar levels in March 2017, almost doubling to as high as $7.22 in September 2017, despite bullion rising only modestly by 3%, thus there is potential for investors and speculators to drive interest regardless of the action in the precious metal. However, there have been some hiccups along the way. Most recently, IAMGOLD traded as low as $2.85 last November and has rallied since but likely faces some resistance above $4 per share. We have some reservations about management, but our long-term forecast for gold bullion alone should be capable of driving the stock's value over the long term. Tap here to read MoneyShow's Top 100 Stock Picks for 2019! Omar Ayales, Gold Charts R Us Gold bottomed in December 2015 and momentum has been shifting to the upside since then, with the yellow metal's overall direction being up. But a multi-year resistance at $1,365 has been very strong suggesting the mega trend in gold has not yet shifted to bullish. Today, deflationary concerns over trade wars are subsiding and the worst seems to have been priced into gold, resources and other assets leaving the upside as the most viable direction for the gold universe. Not only that, a plethora of political and geopolitical uncertainties is also supportive of higher gold. But although gold itself is a great investment for 2019, I prefer to invest in the gold mines. They tend to move up with gold. Moreover, they're grossly undervalued compared to gold and thereby offer the best upside potential. One of the companies we like the most is B2Gold Corp. . It's a mid-tier company that's quickly becoming one of the largest producers. It has great management, great assets and it's one of the gold mines with a healthy balance sheet, sitting on a bunch of cash. Technically, the stock is just breaking above a sideways consolidation band showing upside potential. Buying below $2.85 is a great opportunity. Our upside target for the first quarter of 2019 is $3.25. Gerardo Del Real, Junior Mining Monthly 2018 will be remembered as the year that commodities bottomed and among the many I expect to have a positive 2019, gold and uranium will be standouts. Gold and the associated juniors have seen share prices decimated. I believe one of the few bright spots in 2018 -- Great Bear Resources (Toronto: GBR) -- will also shine in 2019. Great Bear Resources is a Discovery Group company (John Robins group) advancing one of the most exciting recent discoveries in the junior space, the Dixie project in Red Lake, Ontario. Shares in the company caught fire after drill hole DHZ-004 retuned 44.47 g/t gold over 7.00 meters on Aug. 22, 2018. That hole has led many to speculate that the Dixie project could be a company maker. The results led to a $10 million financing, of which nearly $6 million was taken down by Rob McEwen. Great Bear has commenced a 30,000-meter drill program that will consist of approximately 150 drill holes and will continue through 2019. The program will continue to drill test the Dixie Limb Zone (DLZ), including its various sub-zones such as the Hinge Zone and South Limb Zones. The share structure is solid with approximately 35 million shares outstanding and 46 million fully diluted. Expect some great results, expect plenty of news flow and in a rising gold market expect Great Bear to shine bright. Gordon Pape, Internet Wealth Builder Utilities, which were hit hard by interest rate hikes last year, may be a good choice for 2019. The pace of rate increases should slow, and investors will be more interested in stable companies with limited downside and good yields. My choice for conservative investors for 2019 is Fortis Inc. , which is a Canada-based electricity and gas producer and distributor. It has total assets of about $50 billion. Its 8,500 employees serve utility customers in five Canadian provinces, nine U.S. states, and three Caribbean countries. The company is investing heavily in new projects, with $1.5 billion spent in the first six months of the year and another $1.7 billion expected in the second half. The stock pays C$0.425 per month ($1.70 per year) to yield 4% at the current price. The company has raised its dividend every year for more than 40 years, with the next hike expected in the fall. This is not an exciting company, but it is sound, has a strong U.S. position in Florida and New Mexico, and has a 45-year history of annual dividend increases. It won't make you a bundle, but you'll sleep well at night. Meanwhile, our top pick for more aggressive investors is CGI Group . Montreal-based CGI Group is the fifth largest independent information technology and business process services firm in the world. It employs about 74,000 professionals in offices and delivery centers across the Americas, Europe, and the Asia Pacific region. The stock dropped a little during the December correction and looks attractive at the current price. The balance sheet is solid. At 2018 fiscal year-end, the company had $184.1 million in cash and $1.3 billion in unused credit facilities. This is an international company with excellent upside potential. Ralph Aldis, U.S. Global Investors Right now, Wesdome Gold Mines (Toronto: WDO) is probably, in my opinion, the most likely company to get taken out in the gold space in 2019. They have two operating mines at the Eagle River Complex in Ontario that share a central mill. It also has the Kiena Complex in Quebec that is basically being redeveloped. There have been some great drill holes at the mines there, and in some cases, multi-ounce per ton. The mine is starting to shape up to be a real gem and if it restarts it will be a big catalyst. The gentleman running Wesdome, CEO Duncan Middlemiss, is doing a great job. People I know were throwing term sheets at him all this past year to see if he wanted to raise some money. But Duncan recognized that he didn't need to raise any money. Instead, he's been putting money in the bank by producing gold at a profit and has continued to execute and put out good drill results. Wesdome is geographically situated in a very safe jurisdiction and has a lot of prospectivity. Investors probably could do well to buy and hold onto it for a while. The management team there and the board of directors, led by Charles Page, are very much involved in trying to make Wesdome a success story.

Get Northern Exposure With These 8 Canadian Stock Picks for 2019

Advisors mine for value among Canadian stocks and pick their favorites for this year.

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