What are we looking for?
Value companies with low volatility and high returns.
The screen
My colleague Rob Belanger and I started with North American companies greater than $5-billion in market capitalization and we sorted them from the largest to the smallest.
The price-to-book ratio (P/B) is the current share price divided by the book value per share. A low P/B could mean the company is undervalued, and we are only showing companies with a P/B of two times or less.
Companies had to have dividend yields greater than 3 per cent.
The price to cash flow ratio (P/CF) represents the amount an investor is willing to pay for a dollar generated from a company's operations. A low number is preferred.
We looked for companies that were in the top 20 per cent of low volatility companies in the past 90 days, and we are looking for a low number. Lower volatility means a security's value does not fluctuate dramatically, but changes in value at a steady pace over a period of time.
We also looked for companies that were in the top 20 per cent of total returns in the past 90 days, and we are looking for a high number.
What did we find?
Brookfield Property Partners LP is listed on the NYSE and on the TSX. It is a global property management company that owns, operates and invests in office, retail, multifamily and industrial assets around the world. BPY.UN has the lowest P/B and the highest total return on our list.
H&R REIT has the highest yield and an extremely low P/B. The company's portfolio consists of $13-billion in diversified real estate assets throughout North America.
W.P. Carey Inc. is a net-lease REIT that provides long-term sale-leaseback and build-to-suit financing services for companies around the world. Carey has the highest P/CF and the lowest volatility.
Please consult an investment professional or conduct further research before investing in any of the companies on our screen.
Michael Bowman is a portfolio manager at Hamilton-based Wickham Investment Counsel Inc., an adviser to high-net-worth clients.