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After a strong run, are these companies still worth buying? Add to ...

We look at stocks that are close to their highest levels in 10 years

What we’re looking for

The stock market has had a tremendous run in recent months. The S&P/TSX Composite Index is close to 14,000 points – a level not seen since the spring of 2011 and, before that, in the summer of 2008.

We have recently run many screens for companies that are undervalued even in this environment. (Eighteen stocks, Twenty stocks, Inexpensive & profitable stocks).

Today, we thought we’d look for quite the opposite – stocks that are close to their highest levels in 10 years. Are they ripe for a little profit-taking at this point – or are they simply building momentum, getting ready to take wing?

What we found

With that in mind, we ran an S&P Capital IQ screen for Canadian stocks that are trading within 1 per cent of their 10-year highs. To filter out the smaller, more volatile stocks, we set a market capitalization limit of $500-million. Then, we added in S&P Capital IQ’s analyst ratings as well.

Our screen turned up a handful of companies, many of them in the energy sector or serving the sector. Despite the recent price appreciation, some of them carry a large number of “buy” ratings. And, as you can see from the column showing forward price-to-earnings ratios, many of them are actually not particularly expensive relative to their expected earnings over the next 12 months.

Pembina Pipeline Corp. pops up on many analysts’ research notes as a strong energy infrastructure pick. At a time when oil and natural gas production are likely to be abundant, Pembina has been expanding its pipeline network and capital spending budget. Its dividend yield is 4.4 per cent.

Kelt Exploration Ltd., a junior oil and gas producer with six “buy” recommendations and zero “sells,” is a new company. It was spun off in Exxon Mobil Corp.’s $3.1-billion acquisition of Celtic Exploration last year and is run by Celtic’s management team. It operates mainly in northeastern British Columbia and west-central Alberta.

Badger Daylighting Inc. and Pason Systems Inc. provide services to the energy and resources sector.

As always, please do your own research before making any investment decisions on the companies mentioned here.

Canadian companies trading within 1% of 10-year high

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