(Reuters) - Energy companies including Paramount Resources and NuVista dominated the list of 30 best performing Canadian stocks over the past three years, an annual ranking by the Toronto Stock Exchange (TSX) showed on Tuesday.
Shares of the 30 companies have surged more than six times on average over the past three years after adjusting for dividends and together added over $120 billion in market value, according to TSX.
Of those, 20 were energy firms with Paramount Resources and NuVista Energy topping the list with their 1,913% and 1,279% surge.
Energy stocks closely track oil prices, which have surged more than 84% since the end of 2020 fuelled by a recovery in demand as economies opened up after COVID-19 lockdowns, supply constraints due to the Russia-Ukraine conflict and production curbs by OPEC+.
The energy sector has the second biggest influence on the Toronto Stock Exchange's $2.37 trillion S&P/TSX composite index, which houses 226 companies and has climbed 24.4% in the past three years.
"Investors are saying these companies are generating so much cash flow and are still undervalued," said David Chelich, global head of energy at TSX.
In comparison, the much larger $37.49 trillion Wall Street benchmark S&P 500, which is largely skewed towards technology companies, has climbed 34.2% in the same period.
"The backdrop for energy remains quite constructive, at least in the near term," said Mike Archibald, portfolio manager at AGF Investments.
"They've continued to have good discipline in terms of capex and are increasing production a lot. So there are lots of cash flows that are coming into these companies."
Other sectors in the list of 30 best performing Canadian stocks were miners including Filo Corp and China Gold International Resources, as well as industrial firms such as Bombardier and Black Diamond Group.
Heavyweight financial stocks were not part of the list.
(Reporting by Medha Singh and Shreyashi Sanyal in Bengaluru; Additional reporting by Khushi Singh; Editing by Shounak Dasgupta)