What are we looking for?
We want to know where the professionals might be putting their money. Specifically, we are looking for the stocks that institutional investors are buying, or likely to buy.
What we found
This week we have looked at utilities and telecoms, and financials. Today’s screen looks at industrials listed on Canadian exchanges. There are 13 companies listed that score in the top 85th percentile for their industry, ranging from Western Canadian oil and gas companies to engineering services in the East.
More about today’s screen
The data comes from StarMine, a Thomson Reuters service that ranks analysts and gathers earnings estimate data to which it applies proprietary research to detect momentum and other factors.
The measurement we are using here is called the StarMine SmartHoldings model. The model is based on an assessment of stocks whose fundamental factors, such as price-to-earnings and debt-to-equity ratios, most closely align with the buying patterns used by institutional investors.
The underlying assumption of the model is that institutional investors buy based on a particular set of criteria that they apply to stocks. Using a proprietary algorithm, StarMine claims to have deconstructed the formulas used by a large number of institutional investors. It then aggregates the results, which it in turn applies to stocks around the world. The result “accurately predicts which stocks will see an increase or decrease in institutional ownership,” StarMine says.
Today’s screen lists the stocks by their percentile rank relative to others in the industrials sector in Canada. The screen also shows the stocks’ percentile ranking versus all other stocks in Canada. Lastly, it rates them by their relative appeal to institutional investors compared with all global stocks. For fun, we have also listed analysts’ upgrades and downgrades over the past 60 days, to see how outlooks of the buy side and the sell side might compare.
Calgary’s Horizon North Logistics Inc. scores a hat trick, with three perfect scores. The company provides accommodation, catering and transportation services for workers exploring and developing natural resources sites in Western Canada. Also at the top, Calgary’s Black Diamond Group Ltd. sells accommodation for workers in the energy services field. Edmonton-based CERF Inc., previously Canadian Equipment Rental Fund Limited Partnership, this month converted into a taxable Canadian corporation. It rents, sells and services industrial and construction equipment and provides waste management services. The shares trade on the TSX Venture Exchange.
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