TODAY'S SCREEN
George Athanassakos, professor of finance and the Ben Graham chair in value investing at the Richard Ivey School of Business, is helping with today's screen.
Today we'll look for stocks with low price-to-earnings ratios and no coverage by analysts. More specifically, stocks must be in the lowest quartile for P/E ratios and be worth at least $1.
WHAT'S THE ADVANTAGE?
Value investors look for stocks that are not in the public eye, Mr. Athanassakos said. "Since no analyst is covering these stocks, they are obscure and more likely to be undervalued than other stocks that are covered."
They tend to be undervalued because institutional investors often avoid stocks that aren't followed by analysts, he said. For an institutional investor, it doesn't look good to have stocks in their portfolios that are not well known and if a stock blows up, it is much easier to just blame the analysts, he said.
Small investors can look at buying these stocks now and if the analysts discover them later, that will help drive up the valuations.
WHAT DID WE TURN UP?
As with any P/E ratios, you need to do your homework. For
instance, World Point had an asset sale last year that increased net income to $6.57 per share (U.S.), which makes the P/E look very low. The operating net income was really 56 cents per share, making the operating P/E much, much higher. The stock might still be interesting because it is not followed by analysts, but it's not nearly as cheap as it first appears.
| $ | $ | EPS | Revenue | Market | ||||
| Price $ | 52-wk | 52-wk | (most rec. | P/E | (most rec. | Cap. | ||
| Stock | Sym | May 15 | High | Low | annual $) | Ratio | annual $) | ($-mil) |
| Sterling Centrecorp | SCF-T | 1.30 | 1.85 | 0.85 | 0.45 | 1.9 | 60,969,285 | 46.2 |
| World Point Terminals | WPO-T | 24.69 | 26.50 | 9.06 | 6.57 | 3.3 | 56,063,000 | 579.6 |
| Cdn. General Investments | CGI-T | 29.03 | 29.24 | 22.01 | 8.44 | 3.4 | 15,408,000 | 597.8 |
| Pebercan Inc. | PBC-T | 2.77 | 5.75 | 2.45 | 0.42 | 5.7 | 129,359,115 | 205.0 |
| PineTree Capital | PNP-T | 13.80 | 16.15 | 2.63 | 2.32 | 5.8 | 294,681,801 | 1,202.4 |
| E-L Financial Corp. | ELF-T | 700.00 | 750.00 | 572.00 | 109.97 | 6.4 | 2,320,794,000 | 2,813.6 |
| PLM Group | PGL-T | 1.20 | 1.55 | 0.76 | 0.15 | 8.0 | 125,541,168 | 34.0 |
| Triant Holdings | TNT-T | 2.26 | 3.95 | 0.42 | 0.26 | 8.4 | 6,464,135 | 9.4 |
| Anvil Mining Ltd. | AVM-T | 16.25 | 18.49 | 6.75 | 1.65 | 8.9 | 181,417,000 | 921.5 |
| CPI Plastics Group Ltd | CPI-T | 1.30 | 2.89 | 1.21 | 0.13 | 9.3 | 141,633,000 | 17.0 |
| H. Paulin & Co. | PAP.A-T | 44.50 | 53.00 | 41.50 | 4.71 | 9.4 | 149,578,000 | 47.6 |
| Enerchem International | ECH-T | 3.80 | 6.50 | 3.00 | 0.39 | 9.7 | 108,096,061 | 58.1 |
SOURCE: GLOBEINVESTOR
EPS and revenue for World Point Terminals, Pebercan Inc., and Anvil Mining are in $U.S.