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Number Cruncher

Companies that can stanch the red ink Add to ...

What are we looking for?

U.S. and Canadian companies that have just turned the corner to profitability and may be decent bait for value hunters. We ran this screen with the help of Bloomberg and required that that each stock had at least three consecutive quarterly earnings in the red before posting a profit in their latest quarter.

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To bolster our confidence that these names may be worth hunting down, each stock had to receive positive earnings revisions from sell-side analysts over the past 28 days.

What we found

A relatively short list of stocks spanning several sectors. Few are household names, but there are some sizeable companies that made the screen, with five boasting a market cap of over $1-billion.

Leave it to the Chinese to have already snapped up one of them: Daylight Energy Ltd. China’s Sinopec signed a deal to buy the oil and gas explorer in October for $2.2-billion. The stock is still trading as the two firms await various regulatory approvals, although Daylight shareholders have already given the acquisition their blessing.

The only other Canadian company on our list is Continental Gold Ltd., which focuses on advanced-stage exploration and development properties in Colombia. The stock has fallen out of favour this month with investors, losing about 15 per cent of its value. But it’s still a hit with the five analysts who cover it: three rate it as a “strong buy” and two as a “buy,” according to Zacks Investment Research.

Real estate website firm Zillow Inc. was still in the red when it premiered this past July at an initial public offering price of $20 (U.S.). The stock tripled on its opening day and while the euphoria has subsided, the stock has managed to stay above its IPO price and is now testing lows for year. At the end of November, the company reported a third-quarter profit, excluding a one-time charge, of $1.1-million and also forecast revenue for the year that topped Street estimates. Analysts, however, still have a mixed view on Zillow: Two rate it a “strong buy,” three a “hold” and one a “sell.”

Follow on Twitter: @eyeonequities

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