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As a contributor to the New Low Observer (http://www.newlowobserver.com/about-this-site), we intend to give new insights on a low risk approach to trading in dividend paying stocks for tax deferred accounts. The New Low Observer (http://www.newlowobserver.com/about-this-site) is not intended for... More
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  • Top 12 Canadian Stocks Near A New Low 0 comments
    Apr 3, 2012 1:30 PM
    This is a list of quality Canadian stocks that within 20% of their respective 52-week low. For those wishing to find the most complete fundamental information on these companies, we recommend visiting one of Canada's leading financial websites, the Financial Post (found here). However, Yahoo!Finance probably has the better long-term charts and historical dividend data.

    SymbolNamePriceP/EEPSPrice/Book% from Low
    GS.TOGluskin Sheff$14.778.981.345.495.50%
    EMP-A.TOEmpire Co. Ltd.$58.0610.534.391.1811.18%
    SNC.TOSNC-Lavalin Group Inc.$40.7515.012.493.211.46%
    TRI.TOThomson Reuters$29.1317.27-1.681.4711.61%
    SJR-B.TOShaw Comm.$21.3920.41.442.8611.99%
    AGF-B.TOAGF Management Ltd.$15.6311.921.131.2212.28%
    TLM.TOTalisman Energy$12.90-0.381.2913.76%
    IGM.TOIGM Financial Inc.$46.7114.093.482.7613.79%
    FTS.TOFortis Inc.$32.4818.231.741.5715.01%
    RCI-B.TORogers Comm. Inc.$40.0613.952.865.7616.96%
    TRPTransCanada Corp.$43.6319.792.171.8817.00%
    BNS.TOThe Bank Of Nova Scotia$56.1512.274.742.2218.11%

     

    1. stocks are in Canadian dollars except TRP, which is calculated in U.S. dollars.

    Watch List Summary

    This watch summary will review Edson Gould's Altimeter when applied to Gluskin Sheff (GS.TO) and SNC-Lavalin (SNC.TO). First up is the Altimeter for Gluskin Sheff (GS.TO). According to Yahoo!Finance, Gluskin Sheff "is a publicly owned investment manager. The firm also provides wealth management services."

    Based on the current quarterly dividend of $0.163, GS.TO is bouncing along the undervalued range of $14.11. Because the middle of the undervalued/overvalued range is $19.42 (fair value), we're expecting that the next upside target is to the fair valued level or +31% above the closing price of $14.77.

    image

    As always, we're primarily concerned with the worst case scenario. For GS.TO, the downside target is based on the December 2008 low at $6.71. Any substantial decline below the $14.11 level should result in GS.TO falling to $10.41. If GS.TO were to fall as low as $6.71 it would be in alignment with our rule of preparing for a decline of -50% or more and allocating our capital accordingly.

    Our next stock is SNC-Lavalin (SNC.TO). According to Yahoo!Finance, SNC.TO "provides engineering and construction, and operations and maintenance services worldwide." Edson Gould's Altimeter, as applied to SNC-Lavalin Group (SNC.TO) presents a pattern that is quite unique. Again, Edson Gould's Altimeter compares the current stock price as it relates to the quarterly dividend that is currently being paid. SNC.TO has a descending Altimeter with the normal undervalued range at $43.60. The next upside target for SNC.TO is at $55, however, we're waiting for resolution on the potential downside action.

    image

    Our worst case scenario is that SNC.TO will continues on the declining trend and reach our downside target of $30.80. In our assumption, the worst case downside target continues to slide as time passes until proven otherwise. Again, while there are major upside targets at $55 and $69, we'd rather wait for the final verdict on retracing back above $43.60 or falling to $30.80.

    Watch List Top 5 Performance Review

    In our ongoing review of the NLO Canadian Watch List, we have taken the top five stocks from our April 13, 2011 list and have checked their performance, approximately one year later, as compared to the S&P/TSX Composite index. The top five companies from that list can be seen in the table below.

    SymbolName4/13/20114/2/2012% change
    RCI-B.TORogers Comm. CL. B34.3240.0616.72%
    SJR-B.TOShaw Comm. CL.B19.6421.398.91%
    EMP-A.TOEmpire Co. CL.A53.6758.068.18%
    TRI.TOThomsonReuters39.129.13-25.50%
    POW.TOPower Corp27.926.75-4.12%
    ---Average change0.84%
    -----
    GSPTSES&P/TSX Composite13,833.6412,507.06-9.59%

    Among the top five companies on our watch list from last year, three of the five companies exceeded the return of the Toronto Stock Exchange index. Power Corp. declined less than the index while ThomsonReuters fell by more than -25%. Taken as a group, the average return was +0.84% as compared to the -9.59% for the representative index.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Themes: long-ideas
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