The Globe and Mail attempts to identify companies growing consistently
at a reasonable price in its Thursday, Feb. 9, edition. The Globe's Ian Tam writes in the Number Cruncher column that for those who subscribe to the
school of GARP (growth at a reasonable
price) investing, this
week's strategy may offer some
fresh ideas. To accomplish this, Mr. Tam ranked
stocks on the following factors:
Forward PEG ratio (a classic
GARP metric that compares the
forward price-to-earnings ratio with
the forward growth rate of earnings.
This answers the question:
Am I paying too much for
growth? lower figures preferred);
earnings variability (measures how consistent a company's
earnings have been historically
-- lower figures preferred);
industry-relative price-to-book
ratio (lower figures
preferred);
and five-year sales growth.
To qualify, stocks must have an
average monthly value of shares
traded of $4.5-million or greater.
Stocks must have a
debt-to-equity ratio that is less
than or equal to that of the
industry median to avoid overly
leveraged companies. Mr. Tam recommends buying Bank of Nova Scotia, Hardwoods Distribution, Supremex, Western Forest Products and Cineplex.
© 2024 Canjex Publishing Ltd. All rights reserved.