Go to the Globe and Mail homepage

Jump to main navigationJump to main content

(Getty Images/iStockphoto)
(Getty Images/iStockphoto)

Number Cruncher

Looking for low-risk stocks – with high expectations Add to ...

What are we looking for?

Canadian stocks that let you sleep at night, but have a good chance of producing strong returns.

The background

Craig McGee, senior consultant at Morningstar Canada, has been looking at this past quarter’s winners and losers.

He was struck by the degree to which riskier stocks have been rewarded in recent months.

More Related to this Story

Stocks with high “beta” scores, for instance have done very well.

(A high beta indicates a stock is more volatile than the general market, while a low beta indicates it is steadier than average.)

The high-beta half of the TSX composite index enjoyed an average total return of 16 per cent from July 1 to Sept. 30, while the low beta half advanced only 4.2 per cent.

It’s unusual for risk to pay off so dramatically.

Mr. McGee looked at how an investor would have fared if she had constructed a portfolio of the 20 highest beta stocks in the TSX composite and updated the portfolio every quarter since 1990.

He found that this risk-loving strategy would have produced an annualized return of minus 3.7 per cent.

He then ran an alternative strategy that picked the 20 stocks with the lowest betas, while only selecting those that had positive consensus estimate revisions and flat or positive earnings surprises.

This strategy resulted in an annualized return of 17.5 per cent since 1990 – a much better result with much lower risk.

Our table today shows the current list of 20 low beta stocks with positive estimate revisions and earnings surprises.

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

Follow on Twitter: @IanMcGugan

 

Canadian stocks with low betas and rising expectations

Company Symbol Market cap ($ mil.) 5-year beta
Aliment'n Couche-Tard ATD.B-T 9,255 0.11
Fortis Inc. FTS-T 6,912 0.13
Empire Co. Ltd. EMP.A-T 1,917 0.13
North West Company Inc. NWC-T 1,089 0.19
Metro Inc. MRU-T 5,561 0.22
Cineplex Inc. CGX-T 1,791 0.29
Cdn. Apt. Properties REIT CAR.UN-T 2,212 0.34
BCE Inc. BCE-T 33,230 0.34
Jean Coutu Group PJC.A-T 1,510 0.36
Telus Corp. T-T 20,432 0.36

Morningstar Canada

Print

Download table as a CSV file

View full table

  • ATD.B-T
  • FTS-T
  • EMP.A-T
  • NWC-T
  • MRU-T
  • CGX-T
  • CAR.UN-T
  • BCE-T
  • PJC.A-T
  • T-T
  • CNR-T
  • CCA-T
  • FCR-T
  • REF.UN-T
  • VRX-T
  • WJA-T
  • OTC-T
  • RCI.B-T
  • CTC.A-T
  • DH-T
Live Discussion of ATD.B on StockTwits
More Discussion on ATD.B-T
Live Discussion of FTS on StockTwits
More Discussion on FTS-T
Live Discussion of EMP.A on StockTwits
More Discussion on EMP.A-T
Live Discussion of NWC on StockTwits
More Discussion on NWC-T
Live Discussion of MRU on StockTwits
More Discussion on MRU-T
Live Discussion of CGX on StockTwits
More Discussion on CGX-T
Live Discussion of CAR.UN on StockTwits
More Discussion on CAR.UN-T
Live Discussion of BCE on StockTwits
More Discussion on BCE-T
Live Discussion of PJC.A on StockTwits
More Discussion on PJC.A-T
Live Discussion of T on StockTwits
More Discussion on T-T
Live Discussion of CNR on StockTwits
More Discussion on CNR-T
Live Discussion of CCA on StockTwits
More Discussion on CCA-T
Live Discussion of FCR on StockTwits
More Discussion on FCR-T
Live Discussion of REF.UN on StockTwits
More Discussion on REF.UN-T
Live Discussion of VRX on StockTwits
More Discussion on VRX-T
Live Discussion of WJA on StockTwits
More Discussion on WJA-T
Live Discussion of OTC on StockTwits
More Discussion on OTC-T
Live Discussion of RCI.B on StockTwits
More Discussion on RCI.B-T
Live Discussion of CTC.A on StockTwits
More Discussion on CTC.A-T
Live Discussion of DH on StockTwits
More Discussion on DH-T

Topics:

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories