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NUMBER CRUNCHER

Cheap, profitable: 20 stocks that can do it all Add to ...

What are we looking for?

Stocks that are all-round stars by the standards of today’s stock pickers.

The market is a fickle creature and what it likes can change quickly.

We wanted to see which stocks look most appealing based upon the best-performing valuation yardsticks of the past year.

How we did it

Craig McGee, senior consultant at Morningstar Canada, looked back at some of the most commonly used strategies for identifying promising stocks to see how each of these approaches performed during 2012.

More Related to this Story

He found that the five best yardsticks for picking stocks during the past year were price-to-sales, CPMS earnings surprise, price-to-trailing-earnings, earnings stability and price-closest-to-12-month high.

The accompanying table shows the 20 Canadian stocks that have the best combination of those five metrics.

To qualify, they had to be in the top half of the CPMS Canadian universe based on average trading volume.

To ensure adequate diversification, no more than four stocks from any single sector were allowed.

More about Morningstar

Morningstar Inc. provides independent investment research in North America, Europe, Australia and Asia.

Its investment research tool, Morningstar CPMS, provides quantitative North American equity research and portfolio analysis to institutional clients and financial advisers.

CPMS figures cover more than 95 per cent of the investable North American stock market.

What we found

The list of all-round stars features many of Canada’s biggest and best-known companies.

But while these companies all score well on the five factors in current favour, they’re not sure things – the qualities the market rewards can shift rapidly.

As always, you should do your own research before buying any of the names listed here.

Follow on Twitter: @IanMcGugan

 

All-round Canadian all-stars

Rank Company Symbol Market
Cap
($-mil)
Price to
Sales
CPMS
Earnings
Surprise
1 Stantec Inc. STN-T 1,992 1.3x 5.83%
2 Magna Intl. Inc. MG-T 13,476 0.4x 3.95%
3 Dorel Industries Inc. DII.B-T 1,259 0.5x 11.61%
4 George Weston Ltd. WN-T 9,672 0.3x 0.33%
5 Toromont Industries Ltd. TIH-T 1,826 1.2x 11.10%
6 Transcontinental Inc. TCL.A-T 974 0.5x 6.33%
7 Great-West Lifeco Inc. GWO-T 26,055 0.9x 0.00%
8 Power Financial Corp. PWF-T 20,975 0.6x 0.23%
9 Industrial Alliance IAG-T 3,596 0.5x 6.96%
10 Maple Leaf Foods Inc. MFI-T 1,891 0.4x 14.15%
11 Bird Construction Inc. BDT-T 606 0.4x 12.88%
12 Manulife Financial Corp. MFC-T 28,348 0.9x 17.46%
13 Chemtrade Logistics IF CHE.UN-T 710 0.9x 8.80%
14 Agrium Inc. AGU-T 16,277 1.0x 17.05%
15 Loblaw Companies Ltd. L-T 11,678 0.4x 2.40%
16 Rogers Communicat.,B RCI.B-T 25,479 2.3x 7.87%
17 Gildan Activewear GIL-T 4,774 2.3x 6.09%
18 Enerflex Ltd. EFX-T 1,005 0.7x 11.10%
19 Metro Inc. MRU-T 6,243 0.6x 0.00%
20 Pembina Pipeline Corp. PPL-T 9,193 2.4x 9.99%

Grades relative to 730 stocks in CPMS Cdn Database (A = good, E = poor). Source: Morningstar Canada

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