Canadian stocks on the Toronto Stock Exchange for earnings plays
Canadian stocks are often overlooked by the investors chasing earnings. Toronto stocks may not be as prominent as thier US counterparts, but they are often hiding in plain site.
There was a paper written on Canadian stocks by Chudek who lists his approach to filtering his stocks as seeking those with high positive earnings surprises vs the analyst estimates. Then again by making sure that the earnings growth is high compared to previous quarters.
It sounds simple, and it is. By doing the opposite and shorting Toronto Stocks with the most negative earnings, and going long Toronto stocks with the most positive earnings he was able to generate a +6% return in two months on the Toronto Stock Exchange S&P 60.
Details of the highest earnings Canadian stocks include:
Mean surprise = 1.2%
Mean market value = $1.65 billion
Median earnings = 7.9 cents per share (basic)
Number of analysts = 3.28
Mean forecast standard deviation = 5.35%
Since majority of investors in the US do not have access to trade Canadian stocks, here are some that trade both on the Toronto Stock Exchange and in US exchanges:
You may recognize many of these names and not have realized that they are Canadian.
LULU – Lululemon Athletica
lululemon athletica (NASDAQ:LULU; TSX:LLL) is a yoga-inspired athletic apparel company that creates components for people to live longer, healthier and more fun lives. By producing products that help keep people active and stress free, lululemon believes that the world will be a better place. Setting the bar in technical fabrics and functional designs, lululemon works with yogis and athletes in local communities for continuous research and product feedback.
THis company has been a hot stock, seeing earning gains over 60% per year.
MERC – Mercer International Inc.
MERC operates a pulp business with the head office in Vancouver, Canada. The most recent earnings announcement had a whopping 34% surprise. The PEG ratio is less than one indicating that the growth in this stock compared to current prices is not yet overvalued, despite positive momentum over the past 6 months. However, the post-earnings drift window has largely closed and the next earnings announcement will be on May 5th. We should see over 47 cents per share to be a candidate for positive earnings drift.
Gold stocks have been getting a lot of attention lately, here is another to add to the list:
UXG – US Gold Corporation
US Gold Price Forecast for 2011
Despite the name, the company is based in Toronto, Canada. To have a positive earnings surprise, the company would need to report more than the -0.06 cents per share (basic) from last year, and more than the one analyst who forecasts -0.07 cents. On May 2nd this earnings announcement will come out.
About Alpha Pro Tech, Ltd.
Alpha Pro Tech, Ltd. is the parent company of Alpha Pro Tech, Inc. and Alpha ProTech Engineered Products, Inc. Alpha Pro Tech, Inc. develops, manufactures and markets innovative disposable and limited-use protective apparel products for the industrial, clean room, medical and dental markets. Alpha ProTech Engineered Products, Inc. manufactures and markets a line of construction weatherization products, including building wrap and roof underlayment. The Company has manufacturing facilities in Salt Lake City, Utah; Nogales, Arizona; Janesville, Wisconsin; Valdosta, Georgia; and a joint venture in India.
When using this method to try find Canadian stocks it is important to remember the foreign exchange variable if you are a US investor, in addition some of the stocks do not get a lot of coverage from analysts so they may be difficult to find.
Keep watching for those earning surprises!
There was a paper written on Canadian stocks by Chudek who lists his approach to filtering his stocks as seeking those with high positive earnings surprises vs the analyst estimates. Then again by making sure that the earnings growth is high compared to previous quarters.
It sounds simple, and it is. By doing the opposite and shorting Toronto Stocks with the most negative earnings, and going long Toronto stocks with the most positive earnings he was able to generate a +6% return in two months on the Toronto Stock Exchange S&P 60.
Details of the highest earnings Canadian stocks include:
Mean surprise = 1.2%
Mean market value = $1.65 billion
Median earnings = 7.9 cents per share (basic)
Number of analysts = 3.28
Mean forecast standard deviation = 5.35%
Since majority of investors in the US do not have access to trade Canadian stocks, here are some that trade both on the Toronto Stock Exchange and in US exchanges:
You may recognize many of these names and not have realized that they are Canadian.
LULU – Lululemon Athletica
lululemon athletica (NASDAQ:LULU; TSX:LLL) is a yoga-inspired athletic apparel company that creates components for people to live longer, healthier and more fun lives. By producing products that help keep people active and stress free, lululemon believes that the world will be a better place. Setting the bar in technical fabrics and functional designs, lululemon works with yogis and athletes in local communities for continuous research and product feedback.
THis company has been a hot stock, seeing earning gains over 60% per year.
MERC – Mercer International Inc.
MERC operates a pulp business with the head office in Vancouver, Canada. The most recent earnings announcement had a whopping 34% surprise. The PEG ratio is less than one indicating that the growth in this stock compared to current prices is not yet overvalued, despite positive momentum over the past 6 months. However, the post-earnings drift window has largely closed and the next earnings announcement will be on May 5th. We should see over 47 cents per share to be a candidate for positive earnings drift.
Gold stocks have been getting a lot of attention lately, here is another to add to the list:
UXG – US Gold Corporation
US Gold Price Forecast for 2011
Despite the name, the company is based in Toronto, Canada. To have a positive earnings surprise, the company would need to report more than the -0.06 cents per share (basic) from last year, and more than the one analyst who forecasts -0.07 cents. On May 2nd this earnings announcement will come out.
About Alpha Pro Tech, Ltd.
Alpha Pro Tech, Ltd. is the parent company of Alpha Pro Tech, Inc. and Alpha ProTech Engineered Products, Inc. Alpha Pro Tech, Inc. develops, manufactures and markets innovative disposable and limited-use protective apparel products for the industrial, clean room, medical and dental markets. Alpha ProTech Engineered Products, Inc. manufactures and markets a line of construction weatherization products, including building wrap and roof underlayment. The Company has manufacturing facilities in Salt Lake City, Utah; Nogales, Arizona; Janesville, Wisconsin; Valdosta, Georgia; and a joint venture in India.
When using this method to try find Canadian stocks it is important to remember the foreign exchange variable if you are a US investor, in addition some of the stocks do not get a lot of coverage from analysts so they may be difficult to find.
Keep watching for those earning surprises!
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