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Hand with coffee mug (Jupiterimages/Getty Images/Polka Dot RF)

Number Cruncher

New CEO, rising expectations: 20 stocks to watch Add to ...

What are we looking for?

Stocks that could gain as a result of new faces in the executive suite.

A Standard & Poor’s report, published in December, found changes in CEOs or CFOs often preceded a rise in companies’ stock prices.

The changes at the top were also reflected in stronger returns on equity (ROE) and in better returns on assets (ROA) for these companies. Both trends persisted for as long as three years after a new CEO takes over.

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With the help of Elynn Tucker, associate director with S&P Capital IQ, we looked at North American-listed companies that have changed CEOs in the last six months.

How we did it

Ms. Tucker used the S&P Capital IQ Screener to search for stocks with North American headquarters and market capitalizations greater than $500-million (U.S.).

Among this group of mid-sized and large companies, 168 firms had changed CEOs during the past six months. Ms. Tucker sorted them by the percentage change in analysts’ expectations for earnings per share. The top 20 are listed here.

The notion behind the list is that rising expectations for earnings should herald operational improvements. In concert with a new CEO, this is a sign that a stock may be in for a prolonged period of market-beating performance.

More about S&P Capital IQ

S&P Capital IQ offers a comprehensive set of tools for fundamental analysis of global securities as well as idea generation and work flow management. Its Web- and Excel-based platform provides access to both real-time and historical information on companies, markets, transactions and people around the world.

What we found

Seventeen of the 20 stocks listed here have seen share price gains over the past six months. There is no guarantee that these gains will continue but the combination of new leadership and improved earnings expectations bodes well.

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

Follow on Twitter: @IanMcGugan

 

Companies that have changed CEOs in past six months, sorted by Street expectations

Company Ticker Market Cap
($US-mil)
Return on
Equity %
(last 12 mo.)
Flagstar Bancorp Inc. FBC-N 737.4 5.9
West Fraser Timber Co. Ltd. WFT-T 3,570.6 5.9
Legg Mason Inc. LM-N 3,658.5 (5.9)
NRG Energy, Inc. NRG-N 7,798.0 6.2
Brocade Communications Systems, Inc. BRCD-Q 2,562.0 5.3
Visteon Corp. VC-N 3,030.4 8.2
Omnicare Inc. OCR-N 3,940.7 5.3
Flowers Foods, Inc. FLO-N 3,924.9 16.8
Green Mountain Coffee Roasters, Inc. GMCR-Q 7,130.9 16.9
Francesca's Holdings Corp. FRAN-Q 1,145.1 100+

Source: S&P Capital IQ

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  • FBC-N
  • WFT-T
  • LM-N
  • NRG-N
  • BRCD-Q
  • VC-NOCR-N
  • FLO-N
  • GMCR-Q
  • FRAN-Q
  • SIRI-Q
  • RMD-N
  • MINI-Q
  • ARX-T
  • R-N
  • BBCN-Q
  • CVG-N
  • SWY-N
  • VCLK-Q
  • LMT-N
Live Discussion of FBC on StockTwits
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Live Discussion of LM on StockTwits
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Live Discussion of NRG on StockTwits
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Live Discussion of BRCD on StockTwits
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Live Discussion of VC on StockTwits
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Live Discussion of FLO on StockTwits
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Live Discussion of GMCR on StockTwits
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Live Discussion of FRAN on StockTwits
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Live Discussion of SIRI on StockTwits
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Live Discussion of RMD on StockTwits
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Live Discussion of MINI on StockTwits
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Live Discussion of ARX on StockTwits
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Live Discussion of R on StockTwits
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Live Discussion of BBCN on StockTwits
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Live Discussion of SWY on StockTwits
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Live Discussion of VCLK on StockTwits
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Live Discussion of LMT on StockTwits
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