The Financial Post reports in its Saturday edition that stock screening can often provide some great investment ideas, and highlight some stocks you may have never heard of. Post columnist Peter Hodson cautions, however, that stock screening does have some disadvantages: The data output is only as good as the data input. Mr. Hodson uses Bloomberg for his screens, which he says is generally very accurate, but is not perfect. One of his approaches with screens is "setting the bar high."
For fun, Mr. Hodson throws in a lot of qualifications, just to see what pops up when we set a really high criteria bar. Here, he screened for low valuation (less than 15 times price/earnings), dividend growth (greater than 5 per cent), sales growth (greater than 10 per cent), earnings growth (greater than 10 per cent), and decent return on equity (greater than 10 per cent) with a market cap restriction (greater than $500-million). He says that as expected, not many companies qualify with such restrictions. Making the list, however, are goeasy, Canadian Western Bank, Equitable Group, Manulife, iA Financial and Enerflex.
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