TSX AT 15,000? UBS SAYS YES

UBS Securities is raising its TSX composite index target to 15,000, or 9 per cent above an estimate of fair value in one year's time, reflecting stable bond yields and 5 per cent profit growth. It closed at 13,664 on Friday.

“While assuming higher valuations is risky, it is also true that 10 per cent to 15 per cent premiums have occurred when the earnings yield gap has been as wide previously,” writes strategist George Vasic.

The recent surge propelling the TSX looks likely to continue, he notes, especially the large gap between earnings and real bond yields, which should spur even more buy-outs, as companies that are flush with cash, and high resource prices attract foreign investors.