FP Trading Desk - Jonathan Ratner

Uranium One, SNC Lavalin and Fortis considered most likely candidates to replace Alcan in TSX 60

Relative to the S&P/TSX composite index, which is most heavily weighted in financials and energy, and underweighted in health care and utilities stocks, the TSX 60 index's most underweighted sector is industrials.

But that doesn't mean S&P will look for more balance when it chooses a replacement for Alcan Inc. (AL/TSX) if and when the aluminum company's takeover by Rio Tinto Plc is complete by the end of 2007.

CIBC World Markets strategist Yin Luo says its replacement could come from either the energy, industrials or utilities sector. Uranium One Inc. (UUU/TSX) is the most likely energy name because of its high level of liquidity, he said in a note to clients. Uranium One would also boost the TSX 60's energy weighting, which is underweight relative to the TSX composite, he added.

Among industrial names, Mr. Luo points to SNC-Lavalin Group Inc. (SNC.TSX) as the most likely candidate given that it has the largest market cap ($6.6-billion) in the TSX completion index.

Fortis Inc. (FTS/TSX) is his pick from the utilities sector due to its underweighting in the benchmark index. There is currently only one utilities stock in the TSX 60, Mr. Luo noted.