What are we looking for?
The S&P/TSX Composite Index is trading near record highs even as Canada-U.S. trade tensions have escalated sharply. With tariffs creating a more uncertain outlook for Canadian businesses, we looked for large, financially sound companies whose shares continue to demonstrate resilience.
The screen
Using Trading Central Strategy Builder, we began by setting a minimum market capitalization threshold of $5-billion, focusing on larger, more established Canadian companies with greater scale and financial resources to navigate an increasingly uncertain trade environment.
We applied Trading Central’s Quantamental framework, a systematic 20-factor model combining valuation, growth, quality, momentum and income, requiring a minimum rating of at least 50 out of 100. The same proprietary framework underpins the Solactive TC Quant CA 50 Index, tracked by the Trading Central Quant Canada 50 Equity Index ETF (TCCA), which provides systematic exposure to 50 high-scoring Canadian companies.
To further emphasize financial resilience, we screened for a minimum dividend yield of 2 per cent and a debt-to-equity ratio of no more than one, favoring companies with attractive shareholder income and relatively conservative capital structures.
We also required stocks to be trading within 15 per cent of their 52-week highs and have average daily trading volume of at least 200,000 shares over the past 90 days.
We have also included year-to-date and 52-week price performance for your reference.
More about Trading Central
Trading Central is a global leader in financial-market research and investment analytics for retail online brokers and institutions. Its product suite provides actionable trading ideas based on technical and fundamental research covering stocks, exchange-traded funds, indexes, forex, options and commodities. Strategy Builder, our stock screener, is available through leading retail brokers in Canada and around the globe.
What we found
Topping our list is Cenovus Energy Inc. (CVE-T), a Calgary-based integrated oil-and-gas producer with operations spanning oil sands, conventional production and downstream refining. With a TC Quantamental Rating of 63, the company stands out for its combination of improving profitability and efficient capital use, posting earnings-per-share growth of 240 per cent last quarter alongside a return on equity of 20.96 per cent, reflecting a sharp rebound in earnings power as production volumes and pricing conditions strengthened. The stock has surged 86.8 per cent over the past year and 81.6 per cent year-to-date, making it the top-performing stock on our list.
Endeavour Mining PLC (EDV-T) carries the highest TC Quantamental Rating on today’s list at 64. The gold producer’s strength is rooted in income and quality rather than momentum, with a dividend yield of 3.02 per cent and an ROE of 26.63 per cent. EPS slipped 7.3 per cent last quarter, a rare soft spot on an otherwise strong sheet, but the stock remains one of the period’s standout performers, up 86.1 per cent over the past year and 30.7 per cent year-to-date.
Manulife Financial Corp. (MFC-T), the life insurer, posts a TC Quantamental Rating of 58, with a dividend yield of 3.23 per cent and EPS growth of 22.4 per cent last quarter pointing to steady, if less dramatic, momentum than the energy names above it. The stock has climbed 43.4 per cent over the past year and 20.4 per cent year-to-date.
Trading Central Strategy Builder offers a back-testing capability to evaluate how well an investing strategy would have performed in the past. Using a five-year historical period with quarterly rebalancing, the screen described above generated a hypothetical annualized return of 18 per cent, compared with 12 per cent for the S&P/TSX Composite Index over the same period.
The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Trading Central in respect of the investment in financial instruments. Investors should conduct further research before investing.
Gary Christie is head of North American research at Trading Central in Ottawa.