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U.S. dollar saves September from a loss

September was a losing month on the markets both north and south of the border. For the first time since the Leaside Stock Index was established in February, both benchmarks were in negative territory.

The S&P/TSX Capped Composite Index Fund (XIC.TO) was down 4.8 percent while the SPDR S&P 500 ETF (SPY) dropped 1.8 percent excluding currency. Meanwhile, the LSI managed to eke out a small gain of 0.8 percent excluding currency.

The big news in September wasn’t an individual stock but rather the U.S. dollar, which appreciated by three cents on the month.

As a result the LSI got a huge boost when it comes to the performance of its 10 American stocks which gained 1 percent excluding currency, but factoring in the exchange were up 3.8 percent in September. 

More importantly, the American stocks entered positive territory for the first time on a year-to-date basis.

Overall, the LSI gained 2.3 percent in September including currency and is now up 8.6 percent since February.

The Canadian stocks had a mediocre month registering a 0.6 percent gain. However, I shouldn’t be too hard on them because they’re up 18.9 percent year-to-date. In addition, the Canadian ETF benchmark lost 4.8 percent in September so on a relative basis they actually did quite well.

They’re a big reason why the LSI went from trailing the benchmarks by eight percentage points at the end of August to less than four on Sept. 30.

A trio of stocks had noteworthy gains in September: Best Buy (BBY), Alimentation Couche-Tard (ATD-B.TO) and Vitamin Shoppe (VSI), up 5.3 percent, 10 percent and 13.3 percent respectively.

Best Buy continues to chip away at its stock price decline from earlier in the year. This month it benefited from an earnings report that saw the troubled electronics retailer beat analyst expectations along with investor speculation how it might benefit were RadioShack (RSH) to declare bankruptcy.

That has not happened as of yet; some see Amazon (AMZN) stepping in to buy its 4,200 stores. Not sure where this all is headed but as long as Best Buy continues to execute its turnaround the stock should continue higher.

Next up is Alimentation Couche-Tard, owners of Mac’s Milk and convenience stores all over the world.

These guys integrate acquisitions better than almost any company in North America. It doesn’t matter whether it’s buying 100 stores or 1,000, it gets them into its system effortlessly.

Up 36 percent year-to-date, it’s the second-best performing stock in the LSI behind only Tim Hortons (THI.TO). Working on a sixth consecutive year of stock market gains I have to wonder if 2015 will see its momentum come to an end. It can’t keep going up — can it?

Lastly, Vitamin Shoppe gained a whopping 13.3 percent in September cutting its loss for the year by more than half. News that activist investors were pushing the company to sell itself to GNC (GNC), its biggest rival, had investors scooping up Vitamin Shoppe shares mid-month. The potential cost savings from a merger in this situation are significant.

Another possibility is one or more private equity firms making a bid to take Vitamin Shoppe private. Either way good things should continue to happen for VSI stock. Heck, it might even make it into positive territory in the near future.

As I write this the markets are getting pounded into submission; it appears that a market correction (possibly severe) is underway. We’ll know more by the time the December issue is out.