The Globe and Mail attempts to identify Canadian stocks growing their
assets by reinvesting profits
back into the company in its Thursday, April 2, edition. The Globe's Ian Tam writes in the Number Cruncher column that the reinvestment
rate measures the percentage
of a company's earnings
(after paying out dividends)
over the book value of a company's
equity. Mr. Tam says companies that
reinvest back into the business
are expected to have good
future growth prospects. For the current column Mr. Tam
looked at smaller companies as
well as large ones. In making his picks, Mr. Tam considered the trailing reinvestment rate
(using trailing earnings per
share and trailing dividends). He also considered the forward reinvestment rate
(using analysts' earnings estimates
and expected dividends).
He looked for positive estimate revisions over the latest
three-month period. Positive earnings surprises were also considered. Mr. Tam only picked companies with positive quarterly sales momentum. Qualifying companies had to have at
least three analysts actively
covering the stock. Mr. Tam's recommended stocks are
NeuLion, Great Canadian Gaming, Kinaxis, Cipher Pharamaceuticals and Exco Technologies.
© 2024 Canjex Publishing Ltd. All rights reserved.