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Number Cruncher

A sleep-easy portfolio growth strategy Add to ...

What are we looking for?

Predictability. Enough of this volatility nonsense: We want stocks that won’t disturb our beauty sleep, but will deliver growth at a reasonable price.

More about today's screen

Craig McGee, senior consultant at CPMS Morningstar Canada, created today’s offering. It’s based on CPMS’s Predictable Growth strategy, which is designed to appeal to conservative investors.

More related to this story

The strategy looks for Canadian stocks that offer growth at a reasonable price. It puts the primary emphasis on solid earnings, growing book values and consistent growth. Secondary importance is placed on low price-to-book ratios along with positive earnings surprises and upward earnings momentum.

More about CPMS

CPMS, a division of Morningstar Canada, provides quantitative North American equity research and portfolio analysis to institutional clients and financial advisers through software and Web-based tools. It covers more than 700 Canadian and 2,200 U.S. stocks, and adjusts for unusual accounting items in each company’s quarterly results to make sure screens can perform correctly.

What did we find out?

The table shows the 15 most attractive stocks according to the strategy. They’re ranked in order, beginning with the most attractive.

Year-to-date, a 30-stock portfolio built on the strategy has generated a return of 9.2 per cent, well ahead of the 4.8 per cent return generated by the S&P/TSX Composite Total Return Index over the same period.

The strategy isn’t just a flash in the pan: It has generated an annualized return of 14.1 per cent since 1986, compared to an 8.4 per cent return for the index. Still, investors should do their own research before buying any of the shares listed here. Even strategies that emphasize predictability can’t guarantee future results.



Notes to Table

Grades relative to 733 companies in the CPMS Canadian database (A = best, E = worst). SOURCE: Morningstar Canada.

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