The Globe and Mail attempts to identify Canadian stocks with good growth potential in its Thursday, July 4, edition. The Globe's Ian Tam writes in the Number Cruncher column that he looked for Canadian companies for which analysts have projected upward growth in earnings for the coming and following fiscal years, but that are available at a reasonable price. Mr. Tam says seasoned investors will recognize this quickly as a GARP (growth at a reasonable price) strategy. The strategy starts by taking the largest 250 Canadian companies (by market cap). Then Mr. Tam considered five-year earnings-per-share deviation. This is a stability metric measuring how consistent earnings have been over the past five years, lower figures are preferred.
He looked for positive three-month estimate revision, higher figures preferred. As well, he considered current and next-year projected growth rate of earnings, higher figures preferred.
To qualify, stocks must have met or beat the latest street expectation on earnings in the past reported quarter. Mr. Tam's recommended picks are Superior Plus, Centerra Gold, Enghouse Systems, Element Fleet Management, Empire and North West Company.
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