Globe and Mail Number Cruncher: Fifteen Canadian consumer stocks with a bright outlook

Ad blocking detected

Thank you for visiting CanadianInsider.com. We have detected you cannot see ads being served on our site due to blocking. Unfortunately, due to the high cost of data, we cannot serve the requested page without the accompanied ads.

If you have installed ad-blocking software, please disable it (sometimes a complete uninstall is necessary). Private browsing Firefox users should be able to disable tracking protection while visiting our website. Visit Mozilla support for more information. If you do not believe you have any ad-blocking software on your browser, you may want to try another browser, computer or internet service provider. Alternatively, you may consider the following two offers if you want an ad-free experience.

Canadian Insider Club
$299/ year*
Daily Morning INK newsletter
+3 months archive
Canadian Market INK weekly newsletter
+3 months archive
30 publication downloads per month from the PDF store
Top 20 Gold, Top 30 Energy, Top 40 Stock downloads from the PDF store
All benefits of basic registration
No 3rd party display ads
10-day money back guarantee*
JOIN THE CLUB
Canadian Insider Ad-Free
$49/ year*
All benefits of basic registration
No 3rd party display ads
10-day money back guarantee*
GO AD-FREE

* Price is subject to applicable taxes. Money back guarantee: For bona fide Ad-Free or Canadian Insider Club subscribers, if you downgrade to Basic or cancel with-in 10 days of first subscribing, we will refund your payment upon request. Immediately after downgrading or cancelling, using the same email that is associated with your account, request a refund via our Contact Us form at the bottom of the page. We will only consider one refund request per household or organization. We cannot accommodate refund requests where an account holder has not provided verifiable address and billing information.

Paid subscriptions and memberships are auto-renewing unless cancelled (easily done via the Account Settings Membership Status page after logging in). Once cancelled, a subscription or membership will terminate at the end of the current term.

What are we looking for?

With Christmas shopping season getting started, today, we are looking for the 15 highest-ranked consumer stocks.

Rankings are determined by the INK Edge V.I.P. criteria (valuations, insider commitment and price momentum). This is the same approach we apply across the broad market to determine membership for the INK Canadian Insider Index, which is used by the Horizons Canadian Insider Index ETF (HII).

The screen

Our universe includes some 800 TSX-listed stocks that meet minimum size and liquidity requirements. To make the grade in this screen, a stock must trade over $3 and have a market cap of at least $250-million.

We begin by determining a stock's rank in each V.I.P. category based on equally weighted factors.

Valuations (past 12 months except dividend yield)
  • price-to-earnings, price-to-book and price-to-sales ratios;
  • enterprise value to EBITDA (earnings before interest, taxes, depreciation and amortization);
  • price-to-cash flow or price-to-cash;
  • shareholder yield (buybacks plus dividends).
Insider (officer and director) commitment
  • recent net insider buying;
  • personal holdings (excludes shares held for other investors);
  • insider intensity, based on the number of insiders buying.
Price momentum
  • based on three, six, and twelve-month returns.
Next, each V.I.P. category rank is equally weighted to determine a composite ranking.
 
In context
 
The percentile V.I.P. category and composite rankings are in relation to all other stocks in the market. Rankings are between 0 and 100, the higher the better. A composite ranking over 90 goes into the top decile "sunny" outlook category. A composite ranking between 70 and 90 goes into the next two deciles, the "mostly sunny" category. INK sunny and mostly sunny outlook categories are not buy recommendations but are designed to identify groups of stocks that have the potential to outperform the market - so keep in mind that even if a particular stock has a bright outlook, it could still rain on your portfolio's parade. Diversification remains key.
 
What we found
 
Defensive names dominate, with nine stocks coming from the consumer non-cyclicals sector, including top-ranked food processor Lassonde Industries Inc. (LAS). In terms of Canadian focused non-food retailers, only three show up: Indigo Books & Music Inc. (IDG), goeasy Ltd. (GSY) and Canadian Tire Corp. Ltd. (CTC). Shaw Communications Inc. (SJR) also makes the list.

Download Spreadsheet with market cap, industry, INK Edge outlook and rankings here.

This article originally appeared in the Globe and Mail on December 3, 2015.

Comment On!

140
Upload limit is up to 1mb only
To post messages to your Socail Media account, you must first give authorization from the websites. Select the platform you wish to connect your account to CanadianInsider.com (via Easy Blurb).