4 TSX Stocks Set to Suffer From a Potential Rate Hike

Rising interest rates will likely cause cash burn and debt problems for these TSX stocks with low working capital and abysmal cash flow

SmallCapPower | May 27, 2016: The U.S. Federal Reserve released recently its FOMC meeting minutes, outlining the process of rate hikes in the coming months. Specifically its Chair, Janet Yellen, mentioned continued growth in the labour market as a factor. More than 90% of the time the U.S. has raised interest rates, Canada has shortly followed suit. Were that to happen, companies with a small amount of cash flow will struggle to earn funds necessary for growth. They will resort to taking on debt and, as such, pay higher borrowing costs. Look out for these TSX stocks with low cash flow and liquidity laggards, who may suffer with rising interest rates.

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SciVacLightstream Resources Ltd. (TSE:LTS) – $0.17
Oil & Gas Exploration and Production

Lightstream Resources Ltd. is engaged in the exploration and development of oil and natural gas in western Canada. The Company’s principal operating areas include southeastern Saskatchewan where it targets the Bakken formation; central Alberta, where it is focused on the Cardium formation, and north-central Alberta, where it focuses on the development of the Swan Hills and are engaged in exploring for light-oil resource plays. It has a land base of approximately 527,000 net undeveloped acres, probable reserves of over 140 million barrel of oil equivalent and a drilling inventory of over 1,865 locations.

  • Market Cap $33.8 Million
  • Current Ratio: 0.75
  • Price / Cash Flow per Share: 0.22

SciVacLong Run Exploration Ltd. (TSE:LRE) – $0.47
Oil & Gas Exploration and Production

Long Run Exploration Ltd. is a Canada-based intermediate oil and natural gas company engaged in the development, exploration and production of oil and natural gas in the Western Canadian Sedimentary Basin. Its activities are concentrated in its core areas, which include the Peace River Montney, the Redwater Viking, the Deep Basin Cardium and the Boyer Bluesky.

  • Market Cap: $90.9 Million
  • Current Ratio: 0.10
  • Price / Cash Flow per Share: 0.60

SciVacCOGECO Inc. (TSE:CGO) – $53.61
Broadcasting

COGECO Inc. is a diversified holding corporation. The Company, through its subsidiaries, operates in two segments: Cable and other. The Cable segment provides a range of Analogue and Digital Television, HSI and Telephony services primarily to residential customers. It also provides business services, including data networking, Ethernet, hosting, high speed Internet (HIS) access and Voice over Internet Protocol (VoIP) services, to small and medium sized businesses.

  • Market Cap: $803.6 Million
  • Current Ratio: 0.52
  • Price / Cash Flow per Share: 1.04

SciVacRock Energy Inc. (TSE:RE) – $0.81
Oil & Gas Exploration and Production

Rock Energy Inc. is a Canada-based mining company whose principal business is the exploration for, and development and production of, crude oil and natural gas in Western Canada. The Company’s projects include Mantario EOR project, Onward Horizontal Viking project and other exploration projects. Its Mantario EOR project produced over 3,300 barrel of oil equivalent (BOE) per day from around 38 vertical and two horizontal wells.

  • Market Cap: $38.5 Million
  • Current Ratio: 0.13
  • Price / Cash Flow per Share: 1.28

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