Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Cancel Anytime
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

What are we looking for?

The Dow Jones Industrial Average is up 18.8 per cent over the past six months, while the S&P/TSX Capped Industrials Index has gained 10.5 per cent in the same period.

In anticipation that the current bull market for industrial stocks continues, we look for Canadian industrial stocks that could benefit from a growing U.S. economy.

The screen

We will be using Trading Central Strategy Builder to search for Canadian manufacturing stocks offering reasonable valuations and efficient operations.

Story continues below advertisement

We begin by setting a minimum market capitalization threshold of $300-million. This gives us roughly the largest 30 per cent of companies in the sector.

Next, we will look for stocks with efficient operations as measured by their operating margin. We will screen for operating margins of 5 per cent or more. Operating margin is a measure of the profit a company makes on each dollar of revenue – higher operating margins are preferred. Finally, to ensure we don’t overpay for our investments we will filter on forward price-to-earnings ratios of 27 or less. The current P/E of the S&P/TSX Composite Index is 27.4.

We have also included dividend yield as well as year-to-date and one-year stock price performance for your reference.

More about Trading Central

Trading Central is a global leader in financial market research and investment analytics for retail online brokers and institutions. Its product suite provides actionable trading ideas based on technical and fundamental research covering stocks, exchange-traded funds, indexes, forex, options, and commodities.

What we found

Canadian industrials poised to benefit from U.S. recovery

RankCompanyTickerMkt. Cap. ($ Bil.)Oper. Margin (%) P/EDiv. Yld. (%)YTD Price Perf. (%)1Y Price Perf. (%)Recent Price ($)
1Westshore TerminalsWTE-T1.250.310.04.125.943.719.48
2Wajax Corp.WJX-T0.45.212.15.49.4236.218.87
3Algoma Central Corp.ALC-T0.613.613.84.118.398.916.60
4Mullen Group Ltd.MTL-T1.210.019.04.011.3191.611.85
5TFI International Inc.TFII-T8.410.323.51.236.3206.888.75
6Transcontinental Inc.TCL-A-T1.911.312.14.23.879.121.12
7Dexterra Group IncDXT-T0.410.64.75.2-10.8250.95.78
8Finning InternationalFTT-T5.07.121.62.714.497.730.58
9Information ServicesISV-T0.421.020.33.320.671.924.00
10Element Fleet Mgt.EFN-T6.024.224.61.92.852.813.60
11Cdn. Pacific RailwayCP-T59.844.325.00.91.649.9443.95

Source: Trading Central

Topping our list is Westshore Terminals Investment Corp., which operates a coal storage and loading terminal in British Columbia. The stock, currently trading near a 52-week high, just had its price target raised to $21 from $20 by TD Securities. The company has the highest operating margin on our list at 50.3 per cent.

Canadian Pacific Railway Ltd. has the second-highest operating margin on our list, at 44.3 per cent, and the highest market cap on our list, at $59.8-billion. The company has made headlines this week after announcing an agreement to buy Kansas City Southern. The deal remains subject to regulatory approval.

Trading Central Strategy Builder provides a back-testing capability to evaluate how well an investing strategy would have worked in the past. Using a five-year historical period with quarterly rebalancing, the screen described had a 13.2 per cent annualized return compared with 7.5 per cent for the S&P/TSX 60 index.

Story continues below advertisement

The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Trading Central in respect of the investment in financial instruments. Investors should conduct further research before investing.

Gary Christie is head of North American research at Trading Central in Ottawa.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies