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Number Cruncher

Stock screens for investment ideas from professional investors. Exclusive to subscribers of Globe Unlimited.

Entry archive:

These 15 stocks offer a good mix of growth and safety

IAN TAM

What are we looking for?

Short-term earnings growth in companies with a reasonable risk profile over the long term.

The screen

This week, I use Morningstar CPMS to create a hybrid strategy that looks for companies with short-term growth in earnings, but also exhibit lower medium and long-term price beta. The aim for this strategy is to take advantage of short-term price movements while still maintaining a reasonable risk profile by investing in companies that exhibit lower sensitivity to the S&P/TSX composite index. Specifically, the strategy ranks stocks on these factors:

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With these 10 Canadian dividend stocks, cash flow is king

Khaled Eniba

What are we looking for?

Attractively valued Canadian securities, generating strong free cash flows to sustain dividend growth, while retaining the ability to invest in their core business.

The screen

We screen for companies providing a sustainable and consistent income stream, with the potential to grow dividends, while maintaining the versatility needed to invest in their business through production expansion, developing new products, or reducing debt. Our goal is not necessarily to find stocks paying attractive yields, but ones capable of growing their dividend while maintaining their payout rate.

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Venturing beyond valuations: An attractive portfolio of 13 Canadian stocks

EMILY HALVERSON-DUNCAN

What are we looking for?

Strong-performing Canadian stocks that are either extremely overvalued or extremely undervalued.

The screen

It is not uncommon in today’s market to hear concerns that stocks are overvalued. Valuations (measured by price to earnings) have been trending higher and as such can give the impression that stocks are too expensive. The question remains: Is it still possible to find a solid portfolio of stocks in such an extreme environment?

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Thirteen U.S. small-cap stocks poised to outperform

Peter Ashton

What are we looking for?

U.S.-listed small-cap stocks that look poised to outperform.

Over the long-term, small-cap stocks should outperform their large-cap counterparts since investors demand a higher level of return to justify the higher risk that goes along with owning small caps. However, over the past five years, large-cap stocks making up the S&P 500 have had a nearly identical performance to the small-cap constituents of the Russell 2000 index.

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These 13 Canadian companies are growing at a reasonable price

IAN TAM

What are we looking for?

Canadian companies growing at a reasonable price.

The screen

This week, I use Morningstar CPMS to create a GARP (growth at a reasonable price) strategy with a tilt toward quality and low volatility for investors who prefer not to deal with the roller coaster that often comes with short-term growth. The strategy ranks stocks on:

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A top-down search for Canadian value investments

HUGH SMITH

What are we looking for?

Value investments in Canada’s most attractive sector.

The screen

Investments can be screened for using either a bottom-up, or a top-down methodology. In a bottom-up screen, company-level attributes that are thought to make a stock a good investment are selected, and then an entire universe of stocks are screened on these attributes. In a top-down screen, macroeconomic or sector-wide forecasts are used to identify the most attractive geographical areas or economic sectors. Stocks are then chosen within these favoured countries or sectors, or exposure can be gained passively by simply buying an index fund.

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These quality U.S. small-cap stocks may have slipped under your radar

Jean-Didier Lapointe

What are we looking for?

We are looking for high quality U.S. small cap stocks that might slip under your radar.

The screen

We screened our U.S. stocks universe, including American depositary receipts, with the following criteria:

  • A market capitalization of more than $500-million (U.S.) but less than $2-billion;
  • An economic performance index, or EPI (return on capital divided by cost of capital) greater than 1.0. An EPI ratio of 1.0 or more indicates a company’s capacity to create wealth for its shareholders (a higher EPI displays a greater rate of wealth creation);
  • A positive EPI change over the last 12 and 24 months;
  • A return on capital greater than 12 per cent;
  • A positive return on capital change over the past 12 and 24 months;
  • A positive sales growth over the past 12 and 24 months;
  • A free-cash-flow-to-capital ratio of 5 per cent or higher. This ratio gives a sense of how well the company uses the invested capital to generate free cash flow, which could be used to stimulate growth, pay and/or increase dividends, reduce debt, etc. A positive figure is good, 5 per cent and above is excellent;
  • A debt-to-equity ratio of less than 1.0;
  • A positive three-month price performance.

More about StockPointer

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These auto makers could benefit from increased demand for electric cars

SCOTT CLAYTON

What are we looking for?

Sustainable dividends set to accelerate on rising demand for electric cars.

The screen

Until Volvo revealed plans to go “electric,” Tesla was sucking all of the oxygen out of the auto industry. The rollout of its $35,000 (U.S.) Model 3 sedan is the latest headline grabber. Still, for Tesla to justify its whopping $51.9-billion market cap, it must prove it can make enough vehicles, including the half-a-million it forecasts for 2018. That challenge will likely keep the stock volatile – and dividend-less.

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These 15 U.S. stocks are showing strong profitability

IAN TAM

What are we looking for?

Steady growth stocks in the U.S. markets.

The screen

U.S. Federal Reserve chair Janet Yellen’s recent commentary on potential “gradual increases in federal fund rates over time,” reminds equity investors that a positive economic outlook often spurs investment in growth companies (defined by both current profitability and the rate of growth in earnings).

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Checking up on 12 stocks that were earmarked to be index insiders

Ryan Gottschalk

What are we looking for?

How a dozen stocks that I earmarked for possible inclusion in the S&P/TSX composite index in early 2016 have fared since then.

The screen

Many portfolio managers follow a passive investment style, where they are required to accurately replicate the returns generated by an index while maintaining as low a tracking error as possible. If a company is added to an index, the portfolio manager may have to purchase the stock for his or her portfolio to stay in line with the index, which, when combined with similar moves by other market participants, should drive the price of that stock up.

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Hunting for value among U.S. small-cap stocks

Emily Halverson-Duncan

What are we looking for?

Value-oriented stocks within the U.S. small-cap universe.

The screen

Value investing has been practised for many years. Famed investors such as Benjamin Graham, Peter Lynch and Warren Buffett have shown us how profitable value strategies can be. This investment style continues to be implemented by a number of portfolio managers and is available across many different investment vehicles. With so many options, it can be overwhelming for investors to find a successful value strategy that differentiates from the norm.

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These eight U.S. tech stocks are ripe for bargain hunters

PETER ASHTON

What are we looking for?

U.S. technology stocks looking attractive after a recent pullback in the sector.

After more than a year of very strong performance, U.S. tech stocks have recently pulled back significantly from their highs and are now lagging significantly behind other sectors such as financial services and health care. In particular, computer hardware (down 6.9 per cent in the past month) and semiconductor equipment (down 6.8 per cent) are among the worst-performing industries in the U.S. market. Given the continued strength in the U.S. economy, one wonders whether some technology companies may now represent compelling value.

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Thirteen U.S. growth companies that don't looked overvalued vs. their peers

IAN TAM

What are we looking for?

U.S.-listed growth companies that don’t appear overvalued relative to their respective sectors.

The screen

An increasing concern for many investors is the continued buildup of the U.S. market. Year to date, the S&P 500 total return index is up about 9.6 per cent, continuing a rally that essentially spans back to 2009. Further concern is validated when looking at the price-to-book ratio for the index, which currently sits at roughly three, a level close to that of September, 2007, prior to the 2008 housing bubble. By no means does this imply we are heading into another 2008, but it does raise the question whether there is still room left for value investors.

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Fourteen U.S. retail stocks with potential for a short-term rebound

PAUL HOYDA

What are we looking for?

U.S. retail and consumer discretionary securities with the potential to rebound in the short term.

The screen

The e-commerce space continues to grow larger and larger. Shoppers are making a move away from big box stores, purchasing their goods online – at Amazon and elsewhere – at lower costs with greater convenience.

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These five dividend-paying grocers are poised to prosper – despite Amazon

SCOTT CLAYTON

What are we looking for?

Highly sustainable dividends from grocers ready to take on Amazon-led Whole Foods.

The screen

Profit margins for Canadian and U.S. grocery chains are already low, but the willingness of new rival Amazon.com to absorb losses in order to win market share could send them even lower. Amazon is expected to use its technological skills to upgrade Whole Foods with its customer analytics and “click and collect” grocery model.

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The 10 most profitable stocks among Canada’s lesser-known names

IAN TAM

What are we looking for?

Canada’s most profitable companies outside of the S&P/TSX composite index.

The screen

Return on equity is an extremely important metric when measuring profitability of companies. ROE is typically calculated by taking the company’s trailing four quarters’ bottom line (net income), and dividing this by the average shareholder’s equity over the same period. This ratio tells us how much profit is being made using the money invested by common shareholders. This week, I use Morningstar CPMS to look for companies that have shown their shareholders that not only are they currently profitable, but they are profitable on a reasonably consistent basis over a longer time frame.

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Fifteen U.S. stocks that stand out in their sectors

KHALED ENIBA

What are we looking for?

U.S. equities trading at attractive valuations relative to their sectors, and have experienced positive upward analyst revisions.

The screen

Using the Thomson Reuters StarMine quantitative models, I screened for companies with a market cap greater than $1-billion (U.S.) that rank better than most securities in their industries in terms of positive analyst revisions and sector relative valuation.

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Momentum-driven stocks that capitalize on the upside, protect on the downside

EMILY HALVERSON-DUNCAN

What are we looking for?

Momentum-driven stocks that capitalize on the upside while protecting on the downside.

The screen

Traditional momentum strategies are typically associated with extremes – extreme highs and lows, extreme turnover and extreme risk. These strategies are usually best suited for active, aggressive investors with a high risk tolerance. While the long-term returns can be quite attractive, the accompanying volatility tends to be too much for the average investor to stomach.

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Searching for riches in gold and silver stocks

PETER ASHTON

What are we looking for?

Canadian precious metal stocks looking attractive after recent price declines.

Gold and precious metal stocks are one part of the market that has suffered an outsized decline over the past months. The S&P/TSX composite index is down about 1 per cent over the past three months while the S&P/TSX global gold index is down almost 15 per cent in the same period. Gold stocks have been under pressure because of expectations of more U.S. interest rate increases and the corresponding strengthening of the U.S. dollar. As traders digest the relative value of precious metals compared with other investments, a strengthening of gold and silver stocks is possible.

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Ten TSX stocks that combine earnings momentum, staying power

IAN TAM

What are we looking for?

Short-term earnings growth combined with long-term earnings consistency.

The screen

By combining short-term growth with consistency, my aim is to uncover stocks that might have improved chances of weathering a downturn despite the short-term increase in stock price. I used Morningstar CPMS to create a strategy that ranks stocks based on:

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Number Cruncher Contributors

Ted Dixon, CFA

E-mail this writer

Ted Dixon is co-founder of INK Research. INK stands for Insider News and Knowledge and through www.inkresearch.com is Canada's first on-line financial news and research service providing investor insight into what public company executives and significant shareholders are doing with their ownership interests.

Follow Ted on Twitter @TedDixon

Sean Pugliese, CFA

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Sean Pugliese, CFA, is an investment portfolio manager at Wickham Investment Counsel, helping individuals, families and other investors.