WHAT ARE WE LOOKING FOR?
We’ve spent the last few days looking at Canadian and U.S. stocks with the best and worst growth prospects. Back at the end of May, we isolated the 10 best and 10 worst Canadian growth stories. Let’s see how those stocks have performed since then.
MORE ABOUT THE SCREEN
At the end of May, we used the screening tool available from Thomson One Analytics to look for Canadian-listed stocks that had at least 20-per-cent expected revenue and share profit growth for this year and next. We then took the top 10 for earnings growth for next year.
We also looked for companies with less than 2-per-cent revenue and share profit growth for this year and next year. We took the 10 worst for earnings growth for next year.
Stocks for both groups also had to have a minimum market capitalization of $250-million.
WHAT DID WE LEARN?
Neither list has done well, but the performance of the worst growth group isn’t much worse than the best growth group. There are a number of reasons for this. Many of these stocks are driven by commodity prices. For instance, many of the energy companies have been hurt by low natural gas prices. Small-cap stocks also have somewhat recovered from the correction in August, but aren’t back to their summer highs. Some companies, such as Cyries Energy, have been hurt by delayed production too.
BOTTOM LINE
The analysts aren’t going to get their earnings estimates right all the time. High growth estimates might lead you to an interesting stock, but a lot more research is needed before you should pull the trigger on buying the stock.
Table: View result set 
