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What are we screening for?

North American-listed companies exhibiting strong momentum, value and earnings quality.

The screen

With 2022 in the rear-view mirror, markets have rebounded, with the S&P 500 up over 7 per cent year-to-date. Economic data released last week revealed a strengthening labour market, with the United States posting better than expected job growth for January. Nonfarm payroll increased by 517,000, and the unemployment rate was the lowest in more than 50 years at 3.4 per cent. Despite these positive signs, investors remain cautious given the possibility for a recession. Today, we look for North American-listed companies that can deliver positive returns amid economic uncertainty in 2023.

First, we screen for large-cap North American-listed companies with a market capitalization greater than US$10-billion.

Next, we screen for companies demonstrating strong value and momentum. We use the Refinitiv StarMine Value Momentum Model to screen for companies with a score greater than or equal to 90, representing the top 10 per cent of companies. The value momentum model is a percentile ranking of stocks based on recent valuation and momentum characteristics such as analysts estimates, historical stock returns, and earnings-per-share growth rates, with 100 representing the highest rank.

Finally, we screen for companies with high earnings quality. We use the Refinitiv StarMine Earnings Quality Model to screen for companies with an earnings quality score greater than or equal to 90, representing the top 10 per cent of companies. The earnings quality model is a percentile ranking of stocks based on the sustainability of earnings, with 100 representing the highest rank.

More about Refinitiv

Refinitiv, a London Stock Exchange Group business, is one of the world’s largest providers of financial market data and infrastructure, serving more than 40,000 institutions worldwide. Refinitiv provides information, insights and technology that drive innovation and performance in global financial markets, enabling the financial community to trade smarter and faster, overcome regulatory challenges, and scale intelligently.

What we found

Six North American companies positioned to deliver positive returns

CompanyTickerMarket Cap ($ Mil USD)Earnings Quality Score Value Momentum Score1Yr Total Return (%)Div. Yield (%)Recent Close ($)
Valero Energy CorpVLO-N49,381.68979946.43.2128.09
Marathon Petroleum CorpMPC-N52,850.14969649.62.6116.41
Phillips 66PSX-N46,355.77929313.14.098.08
Cardinal Health IncCAH-N19,845.94969251.12.677.03
DICK'S Sporting Goods IncDKS-N11,246.37939222.01.4134.83
Albertsons Companies IncACI-N11,491.1494903.22.221.45

Source: Refinitiv

The screen, ranked by the StarMine Value Momentum Model, produced six companies across four sectors. Here are two of note:

Valero Energy Corp. VLO-N, which ranked highest in value momentum with a score of 99, is the world’s largest independent refiner, with 15 refineries in the United States, Canada and Britain. Valero reported stronger than expected fourth-quarter earnings, beating analyst consensus by 15 per cent, driven by strong refining margins and increased refinery throughout. The outlook for the refining segment remains positive, with macro tailwinds including increased demand from China, and supply constraints from the European ban on Russian refined products. Valero should see further tailwinds from their Port Arthur, Tex., refinery, which is expected to bring a new coker unit online in May. This coker, which converts residual crude oil into refinery feedstock, will enable the refinery to increase its output of diesel by more than 40,000 barrels a day.

Cardinal Health Inc. CAH-N, the only health care company to make the screen, is an integrated health care services and products company headquartered in Dublin, Ohio. Cardinal’s businesses include manufacturing and distribution of pharmaceuticals and medical products, as well as data solutions for health care facilities. The pharmaceutical segment was a key driver for growth in 2022, and management expects revenue to grow by upward of 15 per cent this year. The medical segment has faced challenges because of increased costs and supply chain challenges, and while management believes these trends are temporary, the company could be negatively affected in the short term if they are not resolved.

Investors are advised to do their own research before trading in any of the securities shown.

Stephen Donovan, MBA, is a senior customer learning manager at Refinitiv, covering cross-asset trading for the Refinitiv Academy.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 19/04/24 7:00pm EDT.

SymbolName% changeLast
VLO-N
Valero Energy Corp
+0.86%163.89
MPC-N
Marathon Petroleum Corp
+0.7%196.38
PSX-N
Phillips 66
+0.91%154.71
CAH-N
Cardinal Health
+2.07%108.19
DKS-N
Dick's Sporting Goods Inc
-0.07%195.08

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