What are we looking for?
Sector leadership provides a clear signal of where investor capital is rotating within the Canadian equity market. With the S&P/TSX Composite Index holding near recent highs, performance is becoming more concentrated in a small group of outperforming industries. In this screen, we focus on the strongest-performing TSX sectors over the past month, led by basic materials (+20.3 per cent) and energy (+9.8 per cent), followed by telecommunications services (+4.8 per cent), utilities (+2.1 per cent), and non-cyclical consumer goods and services (+0.3 per cent). By concentrating on these sector leaders, we narrow our search to parts of the market showing clear relative strength and improving momentum, increasing the probability of identifying Canadian stocks benefiting from sustained buying interest and positive money flow.
The screen
We used Trading Central’s Strategy Builder to screen for Canadian companies with a market capitalization of at least $5-billion and a share price above $15, focusing on larger, more liquid stocks.
We also applied a minimum threshold of 65 out of 100 for the TC Quantamental Rating, Trading Central Momentum Factor Rating, and Quality Factor Rating, each of which rates stocks on a scale from 0 as the most bearish to 100 as the most bullish. The TC Quantamental Rating is a proprietary stock ranking methodology developed by Trading Central that combines valuation, growth, quality, price momentum, and income metrics to assess a company’s overall investment profile. The Momentum Factor highlights stocks with strong and persistent price trends, while the Quality Factor measures a company’s financial strength in terms of profitability, balance-sheet robustness, and earnings quality. Together, these measures help identify stocks with improving technical and fundamental characteristics.
For additional context, we also included dividend yield, price-to-earnings ratios, and both year-to-date and one-year price performance as reference measures when ranking and comparing candidates.
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 worldwide.
What we found
Topping our list is Centerra Gold Inc. CG-T, a Canadian gold producer with operations in North America and Turkey and a $5.5-billion market cap. With a price-to-earnings ratio of 12.39, a 1.03-per-cent dividend yield and a strong one-year return of 208.9 per cent, Centerra combines attractive valuation with powerful price momentum. The stock also carries a TC Quantamental Rating of 73, supported by a TC Quality Factor Rating of 86 and a TC Momentum Factor Rating of 91, reinforcing its position as the highest-ranked name on our screen.
Endeavour Mining PLC EDV-T stands out as a West Africa–focused gold producer operating a portfolio of large-scale mines with a $20.5-billion market cap. It posts the highest TC Quantamental Rating on our list at 80 and the highest TC Quality Factor Rating at 90, reflecting solid profitability and balance sheet strength.
Barrick Mining Corp. ABX-T also features prominently as one of the world’s largest gold producers with a $121.3-billion market cap, making it the largest company on our screen. Barrick combines scale with momentum, delivering a one-year return of 212.2 per cent alongside a TC Momentum Factor Rating of 93 and a TC Quality Factor Rating of 84.
While most of the top-ranked names come from the metals and mining industry, George Weston Ltd. WN-T offers exposure outside the commodity space through its retail and food distribution businesses, including Loblaw Cos. The company carries a $36.8-billion market cap and posts a TC Quantamental Rating of 66, supported by a strong TC Momentum score of 86. Shares are up 1.7 per cent year-to-date and 29.6 per cent over the past year, highlighting that sector leadership is not confined to resource stocks, with defensive consumer names also showing improving momentum.
Trading Central Strategy Builder provides a backtesting capability to evaluate how well an investing strategy would have worked in the past. Using a five-year historical period with quarterly rebalancing, the screen described had a 19-per-cent annualized return, compared with 14 per cent for the S&P/TSX Composite Index.
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.