The Globe and Mail attempts to identify Canadian growth companies creating
wealth for their shareholders
and trading at a discount in its Tuesday, Dec. 6, edition. The Globe's Jean-Didier LaPointe writes in the Number Cruncher column that he looked at about 1,500 stocks, picking only companies with a market capitalization of
$1-billion or greater.
He looked for 12-month growth in revenue of
10 per cent or greater. Mr. LaPointe only considered companies with 24-month revenue growth of 20
per cent or greater.
His picks needed to have an economic performance index,
or EPI (return on capital
divided by cost of capital), of at
least 1. An EPI ratio of 1 or
more indicates a company's capacity
to create wealth for its
shareholders. As well, Mr. LaPointe looked for return on capital of 10 per
cent or greater. Finally, he considered negative future growth value
(FGV), which shows the portion of the
total market value that exceeds
the company's current operating
value, indicating the level of risk.
Canadian growth companies that offer value, according to Mr. LaPointe's figuring, are Canfor, Magna International, Sun Life Financial, Power Financial and New Flyer Industries.
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