What are we looking for?
To be more specific, we went looking for stocks that analysts expect to pop.
More about today’s screen
Craig McGee, senior consultant at CPMS Morningstar Canada, created today’s offering.
He scanned the CPMS Canadian and U.S. databases for the members of the S&P/TSX composite and the S&P 500 that had the highest expectations for price performance.
He compiled a list of the stocks with the top 10 expected returns in each index. (Expected return is defined as the expected dividend yield plus the expected price change assuming the stock hits the consensus analyst 12-month target price.)
To make Mr. McGee’s list, a stock had to have a positive change in its consensus target price in the past 30 days. It also had to have more earnings estimates revised upward than downward in the past 30 days.
The list shown here combines the top 10 from both indexes and is sorted based on expected return.
More about CPMS
CPMS, a division of Morningstar Canada, provides quantitative North American equity research and portfolio analysis to institutional clients and financial advisers through software and Web-based tools. It covers more than 700 Canadian and 2,200 U.S. stocks, and adjusts for unusual accounting items in each company's quarterly results to make sure screens can perform correctly.
What did we find?
A fascinating list that includes mega-giants such as Johnson & Johnson and Apple as well as relative pipsqueaks such as North American Palladium and Cott Corp.
In some cases – Apple, for instance – analysts seem to be betting that a company on a hot streak will continue to be hot. In other cases, the logic is the opposite. PulteGroup, for instance, is a U.S. home builder that has been hard hit by the housing slump. In its case, analysts seem to be betting on a turnaround.
Investors should be interested in seeing what companies are surrounded by the highest expectations. Just remember, though: High hopes have no cash value.
Stocks with the highest expectations for price performance
|Company||Symbol||Expected Return||Expected Yield|
|Silver Standard Res.||SSO-T||81.3%||n/a|
|North Amer. Palladium||PDL-T||76.6%||n/a|
|WestJet Airlines Ltd.||WJA-T||30.0%||1.5%|
|Southwest Airlines Co.||LUV-N||25.3%||0.4%|
|CF Industries Hldg Inc.||CF-N||24.7%||0.9%|
|Brookfield Office Prop.||BPO-T||20.5%||3.4%|
|V F Corp.||VFC-N||20.4%||2.0%|
|Black Diamond Group Ltd.||BDI-T||18.1%||3.2%|
|Discover Financial Serv.||DFS-N||17.2%||1.2%|
|CGI Group Inc.||GIB.A-T||16.8%||n/a|
|Company||Symbol||Expected Return||Expected Yield||Expected Price Change||Consensus Target Price ($)||Price (June 22, 2012)||Change in Target Past 30 Days|
|Silver Standard Res.||SSO-T||81.3%||n/a||81.3%||21.60||11.91||2.4%|
|North Amer. Palladium||PDL-T||76.6%||n/a||76.6%||3.96||2.24||1.2%|
|WestJet Airlines Ltd.||WJA-T||30.0%||1.5%||28.5%||20.00||15.57||2.6%|
|Southwest Airlines Co.||LUV-N||25.3%||0.4%||24.9%||11.50||9.21||4.5%|
|CF Industries Hldg Inc.||CF-N||24.7%||0.9%||23.8%||220.00||177.69||1.1%|
|Brookfield Office Prop.||BPO-T||20.5%||3.4%||17.1%||19.80||16.90||0.7%|
|V F Corp.||VFC-N||20.4%||2.0%||18.4%||170.00||143.56||1.5%|
|Black Diamond Group Ltd.||BDI-T||18.1%||3.2%||14.9%||26.00||22.62||3.0%|
|Discover Financial Serv.||DFS-N||17.2%||1.2%||16.0%||39.00||33.61||2.6%|
|CGI Group Inc.||GIB.A-T||16.8%||n/a||16.8%||27.00||23.12||8.0%|
|Home Depot Inc.||HD-N||11.8%||2.2%||9.6%||57.00||52.02||1.8%|
|Johnson & Johnson||JNJ-N||11.7%||3.7%||8.1%||72.00||66.63||2.9%|
|West Fraser Timber Co.||WFT-T||11.7%||1.1%||10.6%||55.00||49.72||3.5%|