The Globe and Mail attempts to identify high-quality Canadian industrial
companies showing positive revenue
growth and economic performance in its Tuesday, March 14, edition. The Globe's guest columnist Jean-Didier LaPointe writes in the Number Cruncher column that he searched Canadian
industrials using the following
criteria:
a minimum market cap of $350-million;
and an economic performance index,
or EPI (return on capital
divided by cost of capital), of 1.0
or higher. An EPI ratio of 1.0 or
more indicates a company's capacity
to create wealth for its
shareholders (a higher EPI displays
a greater rate of wealth creation); a return on capital of 8 per cent
or higher;
a positive return on capital
change over the past 12 months;
future-growth-value-to-market-value
ratio; the free-cash-flow-to-capital
ratio. This ratio gives a sense of
how well the company uses the
invested capital to generate free
cash flow, which could be used to
stimulate growth, pay and/or increase
dividends and reduce debt; and all companies must pay a dividend. Companies showing positive economic performance are Magellan Aerospace, Westshore Terminals Investment, Hardwoods Distribution, Savaria and Boyd Group Income Fund.
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