The Globe and Mail attempts to identify large-cap Canadian companies
that have growing earnings and
are reinvesting these earnings
for future growth in its Thursday, Feb. 12, edition. The Globe's Ian Tam writes in the Number Cruncher column that the reinvestment
rate is defined as the earnings per
share of a company, less dividends,
divided by the adjusted
book value of a company's equity.
Mr. Tam says the reinvestment rate is a common
measure of growth. Investors
can look at both trailing reinvestment
rates as well as expected reinvestment
rates (based on
consensus estimates for EPS, and
the expected dividends). For this item, Mr. Tam looked for
large-cap Canadian companies
with both an improving trailing reinvestment rate and
expected reinvestment rate. Mr. Tam's picks had to have
positive five-year normalized earnings
growth (which measures the
annual compound growth of
EPS averaged over the past five
years), as well as positive three-month earnings estimate
revisions. Stocks were screened to remove
names with market capitalization
of less than $900-million.
Large caps poised for growth are Dollarama, Valeant Pharmaceuticals, Air Canada, West Fraser Timber and Quebecor.
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