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By: AllPennyStocks.com
The recession of 2009 was a worrisome event that spared no one, regardless of
nationality, economic or social strata. It astounded even the most experienced
economic experts, lowered expectations and made people wonder if it was ever
going to end, and how consumers and investors would come out the other end. The
recession offered up all sorts of parallels to the Great Depression of the
1930s, with one important difference; those in charge politically of the picture
may have gotten a handle on the situation in time to remedy it.
Certainly in Canada, the hardship was as acute as anywhere on earth, with the
unemployment rate spiking almost monthly, until it peaked around 8.7% in August
before tailing off marginally. The rate measured 8.5% for November, the last
month in which figures were available.
To stem the tide, Prime Minister Stephen Harper – whose own job status was at
times precarious – proposed a series of stimulus measures, providing almost $30
billion in support to the Canadian economy, through infrastructure programs,
business support programs, support for housing construction and the like. In
all, the support amounted to about 1.9% of Canada’s total economy. But after
operating with surpluses for years, the Feds found going deeper into deficits a
culture shock.
One casualty of the financial carnage was the erstwhile electronics behemoth
Nortel Networks Corp. (TSX:NT), which filed for creditor protection in January,
while suitors were sought for its much-prized wireless and LTE technology
divisions (the winner was Swedish giant Ericsson, while Avaya purchased its
Enterprise business unit).
The once mighty Bombardier (TSX:BBD.B) was, until recently, a major Canadian
defense contractor. With the latest restructuring, the company sold off nearly
all of its military-related work in Canada. Military Aviation Services was sold
to SPAR Aerospace and land-based defence products made by Urban Transportation
Development Corporation ceased operations as Bombardier moved away from
non-aviation defence products. Air Canada (TSX:AC.A) also faced uncertainty
about whether it would survive. Both stocks can now be had for penny stock
prices.
Quarterly growth in Canada stopped chugging with the third quarter of 2008, and
the economy is to have shrunk by 2.5% this year. Only a 0.1% improvement in this
year’s third quarter gross domestic product signaled the official end of the
recession, though unemployment would remain high for months to come. Toward the
end of the year came a signal, however, that the economic body would recover and
thrive in the next year; RBC Economics came out with a report saying GDP is
expected to rise 2.6% in 2010 as stimulus spending reaches its peak—the best of
all G7 nations. Canada’s largest bank also projects GDP to jump to 3.9% in 2011
(The Bank of Canada has said it expects growth of 3% in 2010 and 3.3% in 2011).
It seems the only place that seemed to be thriving was in the gold sector, which
plumbed record levels above the $1,100 U.S. mark. This could bode well for the
multitude of Canadian companies – big and small-cap -- whose primary focus is on
gold.
Finally, just as things seemed to be getting better – or at least, less gloomy –
tidings from the Middle East threatened again to rock the boat, when, in late
November, the once-affluent nation of Dubai proclaimed it could not pay about
$10 billion U.S. in debts without help. Fortunately, and only a matter of days
later, that help arrived from the neighbouring Arab emirate Abu Dhabi. The
bailout in early December allowed Nakheel, the real estate wing of Dubai World,
to repay a $4.1-billion bond that had matured the previous week.
On equity markets, it was a wounding year, with the S&P/TSX Index dipping as low
as 7,566.94 in the dog days of March, but pushed as high as 11,779 before year’s
end – nowhere near the dizzy heights of 15,000 to which it soared in the summer
of 2008 before everything hit the fan, but a significant improvement just the
same. The TSX Venture Exchange experienced a steady climb throughout the year,
more than doubling its point total from 700 in January to beyond 1,400 by
December.
The TSX Small-Cap Index, measuring the performance of small-cap stocks, peaked
around 560 at year’s end, but not without surviving a few bumps of its own,
dipping down to 308 in March, before starting its climb up the ladder with other
markets.
Two Canadian small-cap stocks in particular stand out: Arsenal Energy Inc
(TSX:AEI) and Andean American Mining Corp. (TSX-Venture: AAG).
For its part, AEI, headquartered in Calgary, is an energy exploration and
production company with producing properties in Canada and the United States.
The Company recently announced that it has participated in the drilling of two
new wells targeting the Bakken in North Dakota, one of which was completed
without stimulation and tested at 590 bbls/d of oil.
The Company has properties in various stages of development in British Columbia,
Alberta, Saskatchewan as well as North Dakota. AEI was featured by
AllPennystocks.com in mid-July, when its price was a paltry 23.5 cents; it has
since more than tripled to 73 cents at last check.
AAG, based in Vancouver, is an international mining and exploration company
focused on growth. The Company is actively pursuing new targets of potential
early stage gold and silver prospects in Peru and currently has two key assets:
the 41,500 hectare Invicta gold-silver-copper advanced exploration project and
61% of Sinchao Metals Corp., owner of the Sinchao polymetallic mineralization
project.
On the Invicta property, drill intersections up to this point indicate grades
broadly clustering from 0.3% to 1% copper, 0.3 grams per ton (g/t) to 1 g/t
gold, and 8-15 g/t silver. Given how gold prices have taken off like a Saturn
rocket, this aggressive drilling is soon to pay off handsomely.
AAG was featured in April, when its stock price was a mere nine cents. By the
end of the year, the price had climbed to 35 cents, up 289%. However investors
watching it closely earlier on saw AAG soaring as high as 48 cents, representing
a potential gain of around 430%!
As 2010 dawns, more and more signs seem to be pointing upward than down,
including those for equity markets, which have demonstrated uncanny recuperative
powers. But only once the more tangible signs do the same, such as employment,
can we really call the harshest and longest recession in decades over.
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