Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Number Cruncher

Lagging stocks that you might want to shun Add to ...

WHAT ARE WE LOOKING FOR?

Stock to avoid because they're having a tough time growing.

MORE ABOUT TODAY'S SCREEN

While on Tuesday we looked for the best growth prospects, today let's look for stocks that analysts believe will have less than 5-per-cent earnings-per-share growth for the current year and next. We'll also look for stocks that are showing less than 5-per-cent sales growth for this year and next. We'll look for stocks with market capitalizations of greater than $250-million and sort all stocks by next year's EPS growth.

WHAT DID WE FIND OUT?

Twelve Canadian companies fell under the 5-per-cent-growth bar. Some of these companies have high dividend yields and high dividend payout ratios, meaning they may be in line for a dividend cut if profits do indeed continue to fall.

There is some debate about whether Manitoba Telecom should keep its dividend after reporting a weak first quarter. The company is estimating a free cash flow shortfall of $120-million in 2010. "In the past, we have argued that MTS could continue to support the dividend through the near-term free cash flow deficits," RBC Dominion Securities Inc. analyst Jonathan Allen said in a recent research note. "However, a better question is should they keep the dividend."

MTS is getting little benefit from paying out its cash while its earnings and free cash flow continue to fall, the payout is well north of 100 per cent and the dividend yield above 8 per cent suggests investors already question its sustainability, the analyst said.

Bell Aliant cut its payout recently and the stock rose on relief from the uncertainty, the analyst added, while suggesting Manitoba Telecom's annual dividend should be cut to between $1.70 and $1.90 from $2.60. Mr. Allen cut his target on the stock to $31 from $29.

In the know

Most popular videos »

Highlights

More from The Globe and Mail

Most popular