Morningstar WHAT ARE WE LOOKING FOR?
Canadian momentum stocks that are outperforming the S&P/TSX.
The S&P/TSX Composite Index continues to rally after hitting the pandemic bottom back in March, 2020, with the index up 16 per cent year-to-date, outperforming the tech-heavy, growth-oriented Nasdaq Composite Index, which is up about 15 per cent in the same period. With the S&P/TSX hovering within 1 per cent of its all-time high, we decided to look for Canadian equities that are indicating the most bullish price momentum. The results were quite interesting.
THE SCREEN
We will be using Trading Central Strategy Builder to search for Canadian large-cap stocks that have demonstrated strong upward price momentum and have been outperforming the S&P/TSX over the past month.
We begin by setting a minimum market capitalization threshold of $5-billion. This will focus our search on mid- to large-cap Canadian stocks while avoiding smaller companies with less stable streams of revenue.
Next, we will limit our search to stocks currently trading within 15 per cent of their 52-week highs, which helps us find stocks that are trending higher.
Finally, in order to find stocks that are outperforming the broad market, we want companies that have gained at least 5 per cent or more over the past four weeks.
Stocks are ranked based on the results of all search criteria combined. We have also included the price-to-earnings ratio, dividend yield, year-to-date and one-year price performance for your reference.
MORE ABOUT TRADING CENTRAL
Trading Central is a global leader in financial market research and investment analytics for retail online brokers and institutions. Trading Central’s product suite provides actionable trading ideas based on technical and fundamental research covering stocks, exchange-traded funds, indexes, forex, options and commodities. Strategy Builder, our stock screener, is available through leading retail brokers in Canada and worldwide.
WHAT WE FOUND
Seeking top-performing Canadian stocks with upward price momentum
| RANK | COMPANY | TICKER | MKT. CAP. ($ BIL.) | CHG. FROM 52W HIGH (%) | 4W PRICE PERF. (%) | YTD PRICE PERF. (%) | 1Y PRICE PERF. (%) |
| 1 | TFI International Inc. | TFII-T | 12.9 | -5.0 | 22.1 | 110.9 | 142.8 |
| 2 | Thomson Reuters Corp. | TRI-T | 64.8 | -0.9 | 6.2 | 25.5 | 40.2 |
| 3 | Loblaw Cos. Ltd. | L-T | 28.2 | -0.6 | 8.1 | 31.3 | 18.1 |
| 4 | Colliers Int'l Group Inc. | CIGI-T | 6.8 | -1.5 | 11.3 | 36.4 | 114.6 |
| 5 | Metro Inc. | MRU-T | 15.6 | -4.6 | 6.4 | 11.3 | 8.5 |
| 6 | FirstService Corp. | FSV-T | 10.3 | -1.7 | 10.5 | 34.9 | 48.8 |
| 7 | Brookfield Asset Mgt. | BAM-A-T | 110.2 | 0.0 | 6.4 | 28.8 | 49.8 |
| 8 | Alim. Couche-Tard Inc. | ATD-B-T | 52.6 | -1.9 | 7.4 | 13.8 | 4.7 |
| 9 | George Weston Ltd. | WN-T | 19.4 | -0.3 | 7.9 | 34.1 | 23.7 |
| 10 | Franco-Nevada Corp. | FNV-T | 36.6 | -13.1 | 6.6 | 20.1 | -11.1 |
| 11 | Progressive Waste Sol. | WCN-T | 41.0 | -1.2 | 5.3 | 19.5 | 15.1 |
| 12 | Boyd Group Services | BYD-T | 5.2 | -3.4 | 6.4 | 9.3 | 24.1 |
To our surprise, no energy stocks made the list even though the S&P/TSX Capped Energy Index remains the top performing sector year-to-date with a gain of 27.9 per cent. A sector rotation may be taking place into consumer staples stocks with the S&P/TSX Capped Consumer Staples Index up 6.5 per cent over the past month, followed by the S&P/TSX Capped Materials Index, up 4.4 per cent. The S&P/TSX Capped Energy Index has slipped 3.8 per cent in the same period.
Topping our list is TFI International Inc., a transportation and logistics company headquartered in Saint-Laurent, Que. The stock price has been in a strong uptrend for more than a year and posted a new record high this week, after second-quarter profit rose almost fivefold as revenue from its acquisition of United Parcel Service’s freight business doubled. The company has the best year-to-date and four-week price performance on our list at 110.9 per cent and 22.1 per cent, respectively.
Global alternative investment firm Brookfield Asset Management Inc. has the largest market cap on our list at $110.2-billion. Its stock, which also posted a new record-high this week, has an impressive year-to-date and one-year performance of 28.8 per cent and 49.8 per cent, respectively.
Franco-Nevada Corp., a resource royalty and investment company based in Toronto, is trading about 13 per cent below its record high from late July last year, which is the biggest decline on our list and may be interesting to investors looking for a discount. The stock is down 11.1 per cent over the past year, however its four-week performance is up 6.6 per cent, indicating a momentum shift to the upside.
Trading Central Strategy Builder provides a back-testing capability to evaluate how well an investing strategy would have worked in the past. Using a five-year historical period with quarterly rebalancing, the screen described had a 10.7 per cent annualized total return compared with 6.7 per cent for the S&P/TSX Composite.