The Globe and Mail attempts to identify Canadian momentum stocks trading at reasonable levels when compared with their historical valuations in its Thursday, March 28, edition. The Globe's Ian Tam writes in the Number Cruncher column that as Canadian equity markets continue their swift recovery from the lows of 2018, investors may be leery of purchasing companies that have run up on their valuations. Mr. Tam searched for companies that have shown short-term price momentum, and are trading near their 10-year median historical valuations (measured across multiple metrics). To find companies Mr. Tam first began by ranking the largest 250 companies in Canada on the following metrics: three-, six- and nine-month price change;
five-year earnings-per-share deviation (a statistical measure showing how volatile a company's earnings have been);
to qualify, companies needed to be trading at or below at least one of their 10-year median historical price-to-book, price-to-earnings, price-to-cash-flow or price-to-sales multiples. Mr. Tam's recommended picks are Alacer Gold, Bank of Nova Scotia, Bank of Montreal, Kirkland Lake Gold and National Bank of Canada.
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