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NUMBER CRUNCHER

Canadian stocks with robust earnings growth Add to ...

Mr. Bowman is a portfolio manager at Hamilton-based Wickham Investment Counsel Inc., an adviser to high net worth clients. michael@wickhaminvestments.com

What are we looking for?

Canadian stocks where recent earnings growth has exceeded, in percentage terms, the growth in share price.

Peter Hodson, CEO of 5i Research, recently wrote a piece for another publication entitled “Five Things to Consider before Selling Your Stocks.” My colleague Sean Pugliese and I used some of Mr. Hodson’s criteria to arrive at today’s screen.

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The screen

We started with Canadian companies over $200-million in market capitalization.

We have sorted these companies based on the percentage change – which had to be positive – in the one-year share price.

One-year earnings per share growth is the percentage change in year over year earnings. We have only included companies showing positive growth.

More importantly, the one-year EPS growth had to be more than the one-year price change.

Quarterly earnings momentum (QEM) is a measure of growth based on the quarterly earnings per share. This is expressed as a percentage and also must be positive.

The EPS surprise is the percentage change between the consensus EPS estimate and the reported EPS of the last quarter. This, too, had to be positive.

The five-year profit margin growth is the percentage change in the profit margin over the past five years. Any companies showing negative profit margin growth were excluded.

What did we find?

Logan International Inc. provides seismic mapping and surveys to energy explorers and producers. The stock has almost doubled in the past 12 months.

Over the past five years West Fraser Timber Co. Ltd. posted profit growth of 97.7 per cent.

Lunenburg, N.S.-based High Liner Foods Inc. is North America’s largest marketer of frozen seafood products. The company has increased the earnings per share by 800 per cent over the past 12 months.

Canadian National Railway has the lowest one-year EPS growth, while rival Canadian Pacific did not make the list.

This diversified equal-weighted portfolio averaged a 31.1-per-cent return over the past 12 months. As always, investors are encouraged to contact an investment professional, or conduct further research.

 

Canadian stocks with strong earnings growth

Company Ticker Price $
(Aug. 9)
Market
Cap
($-mil)
Logan Int'l LII-T 7.96 266
High Liner Foods HLF-T 34.03 577
West Fraser Timber WFT-T 90.50 3,897
Sun Life Financial SLF-T 33.87 20,519
Aastra Technologies AAH-T 25.96 300
Martinrea Int'l MRE-T 12.65 1,063
Keyera Corp. KEY-T 59.84 4,686
Catamaran Corp. CCT-T 59.35 12,221
Metro Inc. MRU-T 72.89 6,796
Atco Ltd. -Class I ACO.X-T 45.34 5,226

Source: Wickham Investment Counsel Inc., Bloomberg

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