The Globe and Mail attempts to identify Canadian energy stocks that are creating wealth for shareholders in its Tuesday, Sept. 11, edition. The Globe's guest columnist Noor Hussain writes in the Number Cruncher column that to make his picks he employs certain criteria that are "paramount" to the economic value-added approach. He says it is a method that will help investors recognize real value. He screened the S&P/TSX Energy sector for companies with a return on capital equal to or greater than the market average of 5 per cent. As well, the economic performance index change had to be greater than or equal to zero over 12 months. The EPI is the ratio of return on capital to cost of capital. It gives shareholders an idea of how much return is generated from each dollar spent. He needed to see a positive change in EVA over 12 and 24 months. This measures the momentum of the wealth-creating ability of the company. EVA is the net operating profit after tax, minus capital charge. Finally, he looked for a positive sales change over 12 months. His wealth generating picks in the volatile energy sector are Suncor Energy, Enbridge, Canadian Natural Resources, Husky Energy, Keyera and Seven Generations Energy.
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