Skip to main content
The Globe and Mail
Get full access to globeandmail.com
Support quality journalism
Just $1.99 per week for the first 24weeks
Just $1.99 per week for the first 24weeks
The Globe and Mail
Support quality journalism
Get full access to globeandmail.com
Globe and Mail website displayed on various devices
Just$1.99
per 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(){console.log("scroll");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);

What are we looking for?

The SPDR S&P 500 ETF Trust (SPY) dropped more than 35 per cent since February’s record high before posting a 15 per cent short-term rebound this week.

So, is this the time to buy? No one knows. But it is a good time to have a strategy in place and stick to it. If you are a bullish long term investor, accumulating quality companies in small increments as the market attempts to find a bottom may be a great opportunity, but be prepared for the possibility of further declines and increased volatility.

For those who are comfortable with volatility, here are a few U.S. stocks our research team in Ottawa has found when applying a “bottom feeder” strategy.

Story continues below advertisement

The screen

We will be using Trading Central Strategy Builder to search for U.S.-listed stocks that have positive cash-flow growth in order to weather this current storm. We want companies that pay us a dividend so we can be paid to wait if the markets continue to decline. A bottom-feeder strategy looks for companies that have declined a substantial amount but remain top quality, so we will apply a price-performance filter to look for companies with a market capitalization of at least US$5-billion that have declined at least 30 per cent year to date. Finally, we are screening for stocks with a price-to-earnings ratio well below the S&P 500 average of 16.9.

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, ETFs, indexes, forex, options and commodities. Strategy Builder is available through leading retail brokers in Canada and worldwide.

What we found

Numerous financial stocks emerged in the screen; there is no doubt financial companies are in a better financial position when compared with the 2008 financial crisis. Topping our list is Carlyle Group Inc., one of the largest firms of its kind, with more than US$220-billion in assets under management. The company invests in real estate, infrastructure and distressed assets, just to name a few areas. Its stock has rallied more than 130 per cent since its lows in December, 2018, and was in a well-defined uptrend before news of the coronavirus. Carlyle shares fell 50 per cent this year before posting a rebound this week for a year-to-date decline of 30.1 per cent.

Next on our list is Canadian Imperial Bank of Commerce, which, of course, also trades on the Toronto Stock Exchange. Its shares have declined more than 31 per cent year to date. CIBC has the highest dividend yield on our list at 7.7 per cent, making it a viable holding for those looking to be paid to wait for a rebound.

Ten more stocks round out our bottom-up strategy. While this may be a difficult time to apply any strategy as global markets remain highly volatile, it’s a great time to build up a shopping list of top quality companies trading at a discount.

Does “no pain, no gain” apply to equity investing during these volatile times? I leave you with a quote attributed to economist John Maynard Keynes that stuck with me through the 2008 financial crisis and a few flash crashes in my career: “The market can remain irrational longer than you can remain solvent.”

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.

Story continues below advertisement

Select U.S.-listed dividend stocks

RankCompanyTickerMkt. Cap. (US$ Bil.) CF Growth (Last Qtr. vs. Prior Yr., %)Div. Yld. (%)P/EYTD Perf. (%)1Y Perf. (%)Recent Price (US$)
1Carlyle Group Inc.CG-Q7.929.75.36.8-30.130.323.35
2CIBCCM-N26.015.87.77.4-31.2-27.358.72
3Interpublic Grp. of Cos.IPG-N6.076.66.88.8-34.8-23.315.78
4Reliance Steel & Alum.RS-N5.9363.08.6-30.40.488.40
5Everest Re Group Ltd.RE-N7.123.23.68.2-36.8-16.4176.00
6Goldman Sachs Group Inc.GS-N57.22.33.26.8-32.5-15.1160.54
7American Financial Group AFG-N6.052.72.58.0-35.2-25.068.86
8Omnicom Group Inc.OMC-N11.719.75.08.9-35.6-23.954.90
9Ameriprise Financial Inc.AMP-N12.85.63.86.6-37.8-13.8107.48
10Aflac Inc.AFL-N29.3133.19.1-30.6-19.939.94
11Snap-on Inc.SNA-N6.030.93.99.0-35.1-27.0111.15
12State Street Corp.STT-N17.32.84.28.4-37.6-25.649.08

Source: Trading Central

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.

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

Comments that violate our community guidelines will be removed.

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