Thirty-four stocks with rapidly improving profit outlooks

Uncovering attractively valued stocks with improving profit outlooks is a proven strategy for strong investment returns. With this post I'll compare all members of the S&P/TSX Composite and S&P 500 in search of lower price-to-earnings stocks where analysts have been raising profit expectations for the next 12 months.

The tables below show the results for both North American equity benchmarks, ranked by percentage increase in analysts' 12-month profit estimates over the past four weeks.

SNC Lavalin Group Inc. heads the domestic list by a wide margin. Analysts have jacked the 12 month profit forecasts by almost 200 per cent in the past month. The company's trailing price earnings ratio looks daunting, but the outlook has improved to the point where forward-looking valuations are, if not compellingly cheap, far more interesting.

Algonquin Power & Utilities ranks highly with a recent 50 per cent jump in profit forecasts, but there's a catch. The column on the far right shows that the big percentage increase in estimates amounts to less than a penny per share in nominal profits.

Canaccord Genuity Group Inc also looks interesting. Forward profit estimates for the brokerage have increased by 20 per cent and the forward P/E ratio looks attractive at 11 times.

Biotechnology companies Gilead Sciences Inc. and Biogen Idec Inc jump out on the U.S. equity table. Both have seen profit forecasts climb by between 14 and 16 per cent and remain attractively valued in terms of forward price to earnings ratios.

Semiconductor and graphics chip provider Nvidia Corp is also worth further research. Analysts have bumped profit estimates higher by 17 per cent, but valuations remain attractive relative to its technology sector peers.

No screening method is infallible, and these tables are only a head start on fundamental research. At first glance, however, there are companies on both tables that look promising and fundamental research could well confirm an index-beating investment for portfolios.