Investors flocking to energy transition, TSX Venture 50 list shows

The latest edition of the TSX Venture 50 list shows investors are increasingly snapping up stocks with any sort of energy transition theme.

Everything from lithium to hydrogen to solar power has a presence on the list of top performers on Canada’s main venture exchange in 2022, which was released by the Toronto Stock Exchange on Tuesday.

“As the world’s really thinking about and grappling with energy transition, critical minerals — things like copper, lithium — are obviously increasingly important,” said Loui Anastasopoulos, CEO of the Toronto Stock Exchange, in an interview.

“Things like electric vehicle batteries, to solar and wind power installations — the demand continues to grow. And I think you’re seeing that in some of the performance here.”

The TSX Venture 50 list showcases small-cap issuers across five sectors — energy, mining, clean technology and life sciences, diversified industries, and technology.

The companies are ranked by their 2022 performance in three areas — market capitalization growth, share price appreciation and trading volume.

In spite of market volatility during the year, companies on the Venture 50 list saw dramatic overall gains, with this year’s winners delivering an average financial return of 73% and an average market capitalization increase of 145%.

Among the winners were Vancouver-based First Hydrogen Corp., which saw its share price increase 144%, and Calgary-based CVW CleanTech Inc., which works to deliver clean technology solutions to Alberta’s oilsands industry and saw its market capitalization increase by 322%.

Other winners included Calgary-based solar energy company Westbridge Renewable Energy as well as renewable energy developer Greenbriar Capital Corp.

But the biggest winner was the mining sector, which grew 174% compared to 34% combined growth among other sectors, driven in part by sudden increased investor interest in the critical minerals and metals space.

“To put it in perspective, in August 2020, we did a financing at that time at 30 cents per unit — today we’re trading at $2.70,” said Eric Zaunscherb, chair of Quebec-based Critical Elements Lithium Corp., one of this year’s Venture 50 winners.

“We’re in an environment where people are dying to get exposure to lithium, so [raising capital] is a lot easier than it was three years ago.”

Lithium — a key ingredient in electric vehicle batteries — is a focus of the government of Canada’s $3.8-billion, eight-year critical minerals strategy. The aim is to increase extraction and production of Canadian lithium, as well as cobalt, copper, titanium, zinc and other minerals used in EV production.

But while investors flocked in 2022 to the mining sector and other companies working to help transition to a low-carbon future, traditional oil and gas also held its own.

Venture 50 companies in the energy sector delivered 89% growth in 2022, according to the TSX, and some — such as natural gas explorer Southern Energy Corp. and oil and gas company ROK Resources Inc. — saw triple-digit growth in both share price and market capitalization.

Anastasopoulos said that’s due to a combination of factors, including spiking oil and gas prices as well as widespread market volatility in 2022 that left investors seeking value and stability.

“Energy’s really being seen as a source of security, and a hedge against inflation … and that’s helped bolster traditional oil and gas companies,” Anastasopoulos said.

“It’s really been supported by strong fundamentals and robust commodity prices as well.”