Globe & Mail 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.
We begin by setting a minimum market capitalization threshold of $300-million. This gives us roughly the largest 30 per cent of companies in the sector.
Next, we will look for stocks with efficient operations as measured by their operating margin. We will screen for operating margins of 5 per cent or more. Operating margin is a measure of the profit a company makes on each dollar of revenue – higher operating margins are preferred. Finally, to ensure we don’t overpay for our investments we will filter on forward price-to-earnings ratios of 27 or less. The current P/E of the S&P/TSX Composite Index is 27.4.
We have also included dividend yield as well as year-to-date and one-year stock price performance for your reference.
MORE ABOUT TRADING CENTRAL
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WHAT WE FOUND
Canadian industrials poised to benefit from U.S. recovery
| RANK | COMPANY | TICKER | MKT. CAP. ($ BIL.) | OPER. MARGIN (%) | P/E | DIV. YLD. (%) |
| 1 | Westshore Terminals | WTE-T | 1.2 | 50.3 | 10.0 | 4.1 |
| 2 | Wajax Corp. | WJX-T | 0.4 | 5.2 | 12.1 | 5.4 |
| 3 | Algoma Central Corp. | ALC-T | 0.6 | 13.6 | 13.8 | 4.1 |
| 4 | Mullen Group Ltd. | MTL-T | 1.2 | 10.0 | 19.0 | 4.0 |
| 5 | TFI International Inc. | TFII-T | 8.4 | 10.3 | 23.5 | 1.2 |
| 6 | Transcontinental Inc. | TCL-A-T | 1.9 | 11.3 | 12.1 | 4.2 |
| 7 | Dexterra Group Inc | DXT-T | 0.4 | 10.6 | 4.7 | 5.2 |
| 8 | Finning International | FTT-T | 5.0 | 7.1 | 21.6 | 2.7 |
| 9 | Information Services | ISV-T | 0.4 | 21.0 | 20.3 | 3.3 |
| 10 | Element Fleet Mgt. | EFN-T | 6.0 | 24.2 | 24.6 | 1.9 |
| 11 | Cdn. Pacific Railway | CP-T | 59.8 | 44.3 | 25.0 | 0.9 |
Source: Trading Central