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Twenty stocks with stable profit, predictable growth Add to ...

CPMS Canadian Predictable Growth strategy puts greater emphasis on consistent earnings and growing book values

What are we looking for?

A portfolio that might appeal to conservative investors seeking growth at a reasonable price.

Back in March, we showcased a strategy developed by CPMS Morningstar that caters to this niche. Today, we update the portfolio.

How we did it

Craig McGee, senior consultant at CPMS Morningstar Canada, created today’s offering based on the CPMS Canadian Predictable Growth strategy.

The strategy looks for Canadian stocks that offer growth at a reasonable price. It puts the greatest emphasis on consistent earnings and growing book values. In addition, it likes companies with low price-to-book ratios, positive earnings surprises and quarterly earnings momentum (QEM), which is a measure of how rapidly earnings are growing.

The strategy tracks the performance of a 30-stock model portfolio. The top 20 stocks that currently qualify as buys are shown in the attached list, ranked in order of their attractiveness to this strategy.

More about Morningstar

Morningstar Inc. provides independent investment research in North America, Europe, Australia and Asia. Its 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.

What we found

Year-to-date, the model has posted a total return of 33.8 per cent, while the TSX Composite Total Return Index is up only 10.2 per cent. Since its inception on Dec. 31, 1985, the model’s annualized return has been 14.3 per cent, compared with 8.3 per cent for the index.

As always, remember that strategies that have worked in the past may not work in the future. Do your own research before buying any of the stocks listed here.

CPMS Canadian Predictable Growth Strategy: Top 20 Stocks

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