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Number Cruncher

Screens that break down the numbers from our investment reporters

Entry archive:

These retail stocks show growing sales, profit margins

CHARLES MARTIN

What are we looking for?

Companies in the retail industry that are growing revenue and gross profit margins while efficiently managing their inventory and costs.

The screen

With recent increases in M&A activity in this industry – for example, last week’s $2.16-billion (U.S.) acquisition of women’s retailer Ann Taylor by Lane Bryant’s parent company Ascena Retail Group – I wanted to take a closer look at metrics that are positive signals for retail stocks.

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These 20 stocks are creating wealth for their shareholders

NICK WINCH

What are we looking for?

The very best EVA-generating companies in Canada.

The screen

We have screened for the 20 best companies in Canada as measured by EVA-per-share in the past year, while filtering for only those who have increased their EVA over the past 12- and 24-month periods.

So what, then, is EVA? As a metric, EVA, or economic value-added, is a measure of the economic profit generated by a business over a given time period. We look at economic profit, which may be different from accounting profit, as it illustrates how much value the company’s investments have added to the business.

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Tracking bullish trends among U.S. industrials

RON MEISELS AND MONICA RIZK

What are we looking at?

Attractive U.S. industrial stocks.

The screen

We limited our pool to the S&P 100 index.

We looked at each stock’s 40-week moving average (40wMA). This is the average closing price over a period of 40 weeks. Charting the moving average week by week gives us a sense of investors’ behaviour: Are they growing more (or less) enthusiastic about the company’s outlook and are they more (or less) likely to purchase the stock? Generally speaking, stocks that trade above their rising 40wMAs are the best candidates for investments; they are the ones that show bullish investor behaviour. We listed the U.S. industrial stocks and identified the status and level of each stock’s 40wMA in the adjoining table.

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Ten Canadian dividend stocks for the cautious investor

IAN TAM

What are we looking for?

Dividend-paying Canadian companies with low variability in earnings, and low historical beta.

The screen

This week I revisit the CPMS Conservative 10 strategy, which is a long-standing model intended for investors who look for steady companies that have reasonable valuations, provide a sustainable yield and have low variability in earnings.

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Borrowing from Buffett's playbook: 20 'moat' stocks

CHARLES MARTIN

What are we looking for?

Companies with a track record of revenue and earnings-per-share growth, superior-earnings quality, low leverage and high-profit margins compared with their peers, and that have bought back shares.

The screen

Legendary investor Warren Buffett celebrated 50 years at the helm of Berkshire Hathaway on May 2 at his annual shareholder meeting. Mr. Buffett has an enviable record of buying and investing in companies with strong brands and a history of high profit margins and market share in their respective industries. In his words, the companies he buys have monopolistic competitive advantages, which he considers to be “economic moats.”

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Six oversold Canadian utilities stocks

PETER ASHTON

What are we looking for?

Well-valued Canadian utilities stocks that may be poised for intermediate-term price appreciation.

So far, 2015 has been a mixed year for the Canadian markets with energy, financials and materials stocks leading the way. All of these sectors have indexes that are above their 50-day simple moving averages, or SMAs. (The 50-day moving average is the sum of the closing prices of the index over the past 50 trading days, divided by 50.)

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20 companies buying back shares, with strong earnings growth

IAN TAM

What are we looking for?

Canadian companies with positive short-term earnings growth that are also buying back shares.

The screen

Share buybacks are often a welcome sight for investors. Companies will use share buybacks as a way to return value to their investors without issuing a dividend. (Reducing the number of shares inherently increases the value of each individual share outstanding.)

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Ten profitable, growing global solar energy stocks

MICHAEL BOWMAN

What are we looking for?

According to the Solar Foundation, an independently funded think tank, the U.S. solar industry added workers 20 times faster than the overall U.S. economy last year. This week my colleague Rob Belanger and I thought we would take a look at solar stocks.

The screen

We started with global companies larger than $500-million (U.S.) in market capitalization and we sorted them from the largest to the smallest.

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These 14 U.S. stocks show falling prices and rising intrinsic value

NICK WINCH

What are we looking for?

A contrarian perspective on U.S. stocks. Specifically, companies combining a recent decline in share price with an increase in intrinsic value.

The screen

We searched all U.S.-traded stocks with a market cap of more than $500-million (U.S.), filtering for the following metrics:

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Materials stocks: Watching the trendlines

RON MEISELS and MONICA RIZK

What are we looking at?

Canadian and U.S. materials stocks.

The screen

We limited our pool to the S&P/TSX 60 index and the S&P 100 index.

To find the most promising, we looked at each stock’s 40-week moving average (40wMA). This is the average closing price for the stock over a period of 40 weeks. Charting the moving average week by week gives us a sense of investors’ behaviour: Are they growing more (or less) enthusiastic about the company’s outlook and are they more (or less) likely to purchase the stock?

More »

Predictable, steady Canadian stocks with growing earnings

IAN TAM

What are we looking for?

Predictable, steady, Canadian companies with growing earnings.

The screen

Over the next 30 days, 94 of the 251 companies in the S&P/TSX composite index will be reporting their quarterly earnings. Conservative investors who are looking for companies with predictable earnings (and avoid big surprises) can look to the following strategy for some ideas.

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Thirteen high yielding U.S. real estate investment trusts

Patrick Gattuso

What are we looking for?

High yielding and underleveraged real estate investment trusts (REITs) trading in the United States that can be considered undervalued based on a relative valuation to the industry average.

The screen

Adding REITs to a portfolio is a great way to diversify and collect a constant stream of income while benefiting from stock appreciation. The objective of this exercise is to identify REITs trading in the United States with a dividend yield greater than 5 per cent that also show three metrics – lower price to funds from operations (P/FFO), price to adjusted funds from operations (P/AFFO) and total debt to total capital ratios – that are lower than the industry average.

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These 10 telecom and cable stocks signal profitability, value

CRAIG McGEE

What are we looking for?

Relative value and growth from cable and telecom companies.

The screen

Over the course of the current six-year bull market, U.S. cable and telecom firms have typically traded at price-to-earnings ratios above their Canadian counterparts – the S&P 500 telecom index P/E had an average premium over the S&P/TSX telecom index of 12 per cent.

More »

Eight superstar semiconductor stocks

PETER ASHTON

What are we looking for?

U.S.-listed semiconductor stocks with reasonable valuations and strong prospects for future growth.

In the past 12 months, the information-technology sector has been one of the highest flying components of the U.S. market. The semiconductor industry has been a big part of this growth with the Philadelphia Semiconductor Index up more than 18 per cent in the past year. Consolidation is also hitting the industry as companies look for ways to boost their growth. In March, NXP announced that it was merging with Freescale Semiconductor in a deal valued at more than $40-billion (U.S.).

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Profitability, value metrics turn up these 20 Canadian stocks

IAN TAM

What are we looking for?

Profitable companies with good earnings yields.

The screen

In Joel Greenblatt’s 2006 publication The Little Book That Beats the Market, he talked about an intuitive model by which to invest in U.S. equities. Looking at two main factors – return on total capital and earnings yield – as well as his own buy/sell discipline, the renowned hedge fund manager was able to significantly outperform the S&P 500.

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Looking for value among global tobacco stocks

MICHAEL BOWMAN

What are we looking for?

Reports surfaced this week that the U.S. Federal Trade Commission is set to approve the $27-billion (U.S.) merger between cigarette manufacturers Reynolds American Inc. and Lorillard.

In the past, not owning tobacco stocks has been hazardous to your portfolio as the five tobacco companies that are included in the S&P 1500 are up about 189 per cent over the past decade, easily blowing away the S&P 500’s approximately 76-per-cent gain.

More »

U.S. health care stocks creating wealth for their shareholders

NICK WINCH

What are we looking for?

U.S. health-care companies that generate free cash flow and create shareholder wealth at an above-average rate.

The screen

We searched all U.S. health-care stocks with a market cap above $500-million (U.S.), filtering for the following metrics:

– free cash flow to invested capital of at least 15 per cent. Free cash flow is what remains to be reinvested in the company after all expenses are considered; high levels of cash better enable a company to fund research, develop new products, make acquisitions, buy back shares, reduce debt and pay dividends. (Invested capital represents the total cash investment that shareholders and debt holders have made in a company.)

More »

How trading momentum can help you size up these top IT stocks

RON MEISELS and MONICA RIZK

What are we looking at?

Canadian and U.S. information technology stocks.

The screen

We limited our pool to the S&P/TSX 60 index and the S&P 100 index.

To find the most promising, we looked at each stock’s 40-week moving average (40wMA). This is the average closing price for the stock over a period of 40 weeks. Charting the moving average week by week gives us a sense of investors’ behaviour: Are they growing more (or less) enthusiastic about the company’s outlook and are they more (or less) likely to purchase the stock? Generally speaking, stocks that trade above their rising 40wMAs are the best candidates for investments; they are the ones that show a bullish pattern. We identified the status of each stock’s average (rising, falling or flat) in the adjoining table.

More »

These 20 U.S. stocks show both value and momentum

IAN TAM

What are we looking for?

U.S. stocks that exhibit good value and momentum characteristics.

The screen

In last week’s Number Cruncher, I looked at names in Canada that exhibit reasonable valuations but also show upward price and earnings momentum. This week I revisit this strategy for the U.S. market.

Recall that value stocks exhibit low price multiples but can be susceptible to the value trap when prices remain suppressed over time because of company-specific or sector conditions. Momentum stocks show positive price returns over the short term but are often highly sensitive to market movements.

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As oil prices go, so go these 10 non-resource stocks

Ryan Gottschalk

What are we looking for?

Companies trading on the TSX exhibiting a strong positive correlation with the price of oil but not classified within the energy or materials sectors. These companies are expected to follow oil price movements.

The screen

As the price of oil has fluctuated dramatically over the past six months, it is difficult to predict future movements and when a reversal in recent trends might be expected.

More »

Number Cruncher Contributors

Ted Dixon, CFA

E-mail this writer

Ted Dixon is co-founder of INK Research. INK stands for Insider News and Knowledge and through www.inkresearch.com is Canada's first on-line financial news and research service providing investor insight into what public company executives and significant shareholders are doing with their ownership interests.

Follow Ted on Twitter @TedDixon

Charles Martin, CFA

E-mail this writer

Charles Martin, CFA, works in the Financial and Risk unit of Thomson Reuters and specializes in asset management.

Craig McGee, CFA

E-mail this writer

Craig McGee, CFA, is a portfolio manager with The Ullman Group at Richardson GMP in Toronto.

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