11 top-rated North American stocks from a quantitative and earnings perspective
What are we looking for?
North American-listed stocks with strong earnings growth and above-average Quantamental ratings.
The S&P 500 index is up over 14 per cent year to date, while the S&P TSX Composite index is up only 3 per cent in the same period, indicating a strong outperformance in U.S. equities over Canadian equities. The technology sector has remained the leader, with the SPDR Select Technology Sector Fund ETF (XLK) up over 38 per cent. We were curious to know which stocks were outperforming their main index from a price performance, Quantamental and EPS perspective and if technology companies would continue to dominate the list.
The screen
We began by screening for North American-listed stocks with a market capitalization of at least US$5-billion in order to find the largest and most stable companies.
Next, we screened for the top-rated stocks using Trading Central’s Quantamental Rating, a proprietary stock-rating methodology that covers more than 50,000 stocks worldwide. This metric rates stocks on a scale of zero to 100, with 100 being the most bullish and zero being the most bearish. The rating uses a combination of valuation, growth, quality, price momentum and income as key metrics. We screened for companies with a rating of at least 60 out of 100. A rating above 50 is considered strong.
We were also interested in stocks that are indicating five-year EPS growth of at least 10 per cent. We like companies that have a proven track record of increasing their earnings per share.
Finally, in order to find companies that are trending higher from a trend following perspective, we screened for stocks that are trading within 5 per cent of their 52-week highs.
For informational purposes, we have also included year-to-date and one-year price performance, the recent stock price, the price-to-earnings ratio and the dividend yield.
More about Trading Central
Trading Central is a global leader in financial market research and investment analytics for retail online brokers and institutions. Its product suite provides actionable trading ideas based on technical and fundamental research covering stocks, exchange-traded funds, indexes, forex, options and commodities. Strategy Builder, our stock screener, is available through leading retail brokers in Canada and worldwide.
What we found
Strong quantitative stocks
| RANK | COMPANY | TICKER | INDUSTRY | MKT.CAP. ($BIL) | RECENT PRICE ($) | TC QUANT.RATING | % CHNG. FRM 52.W.HIGH |
| 1 | TopBuild Corp. | BLD-N | Construction | 7.43 | 234 | 64 | -3.2 |
| 2 | Boyd Gaming Corp. | BYD-N | Travel & Leisure | 7.01 | 69.37 | 64 | -3.2 |
| 3 | Clean Harbors Inc. | CLH-N | Waste Management | 8.33 | 153.97 | 65 | -3.0 |
| 4 | Microchip Technology Inc. | MCHP-Q | Semiconductors | 47.25 | 86.64 | 64 | -1.3 |
| 5 | Polaris Inc. | PII-N | Vehicles & Parts | 6.88 | 120.87 | 62 | -2.4 |
| 6 | Texas Roadhouse Inc. | TXRH-Q | Restaurants | 7.44 | 111 | 62 | -4.9 |
| 7 | Stryker Corp. | SYK-N | Medical Devices & Instruments | 111.44 | 293.57 | 61 | -4.2 |
| 8 | Snap-On Inc. | SNA-N | Industrial Products | 14.39 | 271.78 | 60 | -1.1 |
| 9 | Darden Restaurants Inc. | DRI-N | Restaurants | 20.27 | 167.64 | 62 | -0.6 |
| 10 | CGI Inc. | GIB-N | Software | 24.73 | 104.82 | 61 | -1.1 |
| 11 | Dollarama Inc. | DOL-T | Retail - Defensive | 24.51 | 85.87 | 60 | -0.5 |
Source: Trading Central
To our surprise, technology stocks did not dominate our list.
Topping our list is Topbuild Corp a leading installer and distributor of insulation products in the U.S. construction industry. The stock confirmed a new 52-week high this week. The company has a TC Quantamental rating of 64 out of 100, which is strong. The stock performance continues to outperform benchmark indices with a year-to-date return of 49.5 per cent, compared with 14 per cent for the S&P 500. The current stock price is within 17 per cent of its record high from 2021.
Stryker Corp , a manufacturer of specialty surgical and medical products, has the highest market cap on our list at US$111.44-billion. The stock is trading within 4.2 per cent of its 52-week high after gaining 20.1 per cent year to date.
Dollarama the Montreal-based retailer, was the only Canadian company to make the list. The stock has a TC Quantamental rating of 60 out of 100 and just posted a record high at the time of this writing. It continues to outperform the S&P TSX Composite with a return of 8.4 per cent year to date.
Trading Central Strategy Builder provides a backtesting 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 has a 20-per-cent annualized total return, compared with 9 per cent for the S&P 500 index.
The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Trading Central regarding investment in financial instruments. Investors should conduct further research before investing.
Gary Christie is head of North American research at Trading Central in Ottawa.