What are we looking for?
Companies with price momentum backed by fundamental strength.
Since the beginning of the year, momentum stocks have been outperforming in Canada, boosted by strength in gold. The S&P/TSX Composite Momentum Index has gained 35.3 per cent, compared to 23.7 per cent for the S&P/TSX Composite Index.
We believe sole price momentum can be speculative, however, complementing it with fundamentals, such as positive earnings estimates revisions and accelerating cash flow, could give investors a way to participate in the trend with greater confidence.
Today, we focus on Canadian names outside of the materials sector, which has already seen an extended rally.
The screen
We screened the Canadian universe excluding Materials sector using the following criteria:
- Market capitalization greater than $2-billion dollars;
- Positive six-month price momentum;
- Positive three-month earnings revisions for the next fiscal earnings per share;
- Positive quarterly earnings momentum using trailing twelve-month values;
- Positive quarterly cash flow momentum using trailing twelve-month values;
We retained the top 15 per cent of companies based on all the criteria mentioned.
For informational purposes, we also added one-year price return and dividend yield.
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What we found
Stocks with positive sentiment
| TICKER | NAME | PRICE ($) | 3M EPS REV. (%) | EPS MOM. (%) | CF MOM. (%) | MKT CAP (Bil. $) | 6M PRICE RTN (%) | 1Y PRICE RTN (%) | DIV. YLD. (%) |
| CVE-T | Cenovus Energy Inc. | 24.49 | 31.1 | 27.8 | 8.0 | 42.8 | 35.5 | 8.1 | 3.3 |
| LSPD-T | Lightspeed Commerce* | 18.37 | 29.4 | 7.3 | 59.0 | 2.5 | 28.0 | -21.8 | – |
| BIP-UN-T | Brookfield Infr Prtnr* | 49.36 | 24.7 | 6.8 | 12.6 | 22.8 | 8.6 | 4.0 | 4.9 |
| CLS-T | Celestica Inc.* | 451.6 | 23.3 | 11.4 | 12.0 | 52.0 | 184.2 | 281.7 | – |
| BB-T | BlackBerry Limited* | 6.39 | 17.6 | 0.3 | 23.8 | 3.8 | 17.5 | 99.1 | – |
| EFX-T | Enerflex Ltd.* | 18.81 | 10.1 | 27.7 | 18.6 | 2.3 | 94.5 | 85.3 | 0.9 |
| CURA-T | Curaleaf Holdings Inc* | 3.72 | 8.8 | 1.9 | 4.2 | 2.5 | 226.3 | 20.4 | 0.0 |
| GWO-T | Great-West Lifeco Inc. | 59.9 | 6.5 | 4.1 | 17.7 | 55.1 | 15.0 | 22.3 | 4.1 |
| MG-T | Magna Intl. Inc. * | 69.97 | 3.8 | 1.2 | 0.8 | 19.7 | 40.4 | 17.0 | 3.9 |
| TD-T | Toronto-Dominion Bank | 113.58 | 2.4 | 1.9 | 27.4 | 193.9 | 19.8 | 44.2 | 3.7 |
| CM-T | Cdn Imperial Bank | 118.92 | 1.3 | 2.8 | 19.3 | 110.5 | 27.3 | 32.6 | 3.3 |
| POW-T | Power Corp. of Canada | 67.14 | 1.1 | 5.4 | 2.0 | 39.4 | 26.4 | 44.5 | 3.6 |
| RY-T | Royal Bank of Canada | 204.01 | 0.5 | 4.5 | 8.1 | 287.7 | 17.3 | 18.2 | 3.0 |
Cenovus Energy (CVE-T) is a Canadian integrated energy company with oil sands, conventional production, and downstream refining. CVE leads with the highest earnings estimate revisions at 31.1 per cent, accompanied by a six-month price momentum of 35.5 per cent. The company demonstrates strong quarterly earnings growth of 27.8 per cent and cash flow growth of 8.0 per cent. CVE offers exposure to the affordable energy sector, pairing strong earnings potential with modest stock price momentum.
Brookfield Infrastructure Partners (BIP.UN-T) owns and operates essential, long-life infrastructure assets across utilities, transportation, data, and midstream. Its Data segment provides telecommunications, fiber, and data storage services. Brookfield ranks third in our screen with earnings revisions of 24.7 per cent. While its price momentum and growth are more moderate, it offers the highest dividend yield on our list at 4.9 per cent, making it attractive for income-focused investors and providing exposure to the stable infrastructure asset class.
Celestica (CLS-T) is a global electronics manufacturing services for technology, aerospace, health, and industry. The stock has delivered an outstanding one-year return of 281.7 per cent, the highest on our screen, along with a strong six-month gain of 184.2 per cent. Analysts have steadily raised their estimates in recent months, reflecting the underlying fundamental strength behind these impressive numbers. However, the stock’s price has significantly outpaced earnings revisions, which may constrain growth in the next quarters.
Investors are advised to do further research before investing in any of the companies listed in the accompanying table.
For more details about these stocks, subscribe to the Inovestor for Advisors platform for free.
Anthony Ménard, CFA, is vice-president of data management at Inovestor.
