Twelve strong performing stocks that may fly under your radar
FN.TSX, LUC.TSX, RAY.A.TSX, ECI.TSX, LAS.A.TSX, MKP.TSX, AW.UN.TSX, GSY.TSX, MAL.TSX, CFX.TSX, XTC.TSX, GCG.A.TSX
What are we looking for?
Small- and mid-cap Canadian companies that might fly under your radar, showing strong economic performance as well as revenue growth.
The screen
We screened Canadian stocks by looking at the metrics such as:
A market cap between $250-million and $2-billion;
An economic performance index, or EPI (return on capital divided by cost of capital) above 1.5. An EPI ratio of 1.0 or more indicates a company's capacity to create wealth for its shareholders (a higher EPI displays a greater rate of wealth creation);
A positive EPI change over the past 12 months;
A return on capital of 12 per cent or greater;
A positive sales growth over the past 12 and 24 months;
A dividend yield of 1 per cent or greater;
A debt-to-equity ratio (leverage) displayed for informational purposes.
More about StockPointer
StockPointer is a fundamental analysis tool based on an EVA (economic value-added) model to quickly and easily identify investment opportunities. In addition to providing detailed reports on more than 8,500 companies (Canadian and U.S. stocks and ADRs), StockPointer also allows investors to create personalized filters and build custom portfolios.
What did we find?
Twelve companies fit our list of criteria.
First National Financial Corp., Canada's largest non-bank lender, comes up as the company with by far the highest EPI of the group, good revenue growth and an attractive dividend yield of 5.6 per cent. The year-to-date total return of the stock is close to 38 per cent. Without a doubt, First National's economic performance is sky-high, but we need to keep mind that it is using a very aggressive leverage ratio of more than 7,000 per cent to generate these profits.
Stingray Digital Group, the Montreal-based global business-to-business multiplatform music and media solutions provider co-founded by Eric Boyko and Alexandre Taillefer, offers a good balance of strong economic performance, sustainable growth, healthy leverage and a dividend yield of more than 2 per cent. Stingray Digital was a finalist in 2013 and '14 in Deloitte's Technology Fast 50TM list and was awarded the Best IR (Investor Relations) for an IPO at the IR Magazine Awards Canada early in 2016.
Investors are advised to do additional research prior to investing in any of the companies mentioned.
Jean-Didier Lapointe is a financial analyst at Inovestor Inc.
Mon, 15 Aug 2016 18:33 EDT