In this week content analysis, we review how you can use the SP Score to replace one of your holdings that is being acquired. For example, assuming Burger King receives shareholder and regulatory approvals to acquire Tim Hortons (THI), investors will need to find opportunities to investment their proceeds.
Investors who would like to maintain those proceeds in the consumer discretionary sector can use the SP Score tool to find the highest scoring companies in that specific sector. It is possible to adjust the SP Score based on Stock Exchange/Indices, Sector and Market Capitalization.
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Currently, the top 5 SP Score for Canadian large cap consumer discretionary stocks are:
– Magna International (MG) – 71%
– Shaw Communication (SJR.B) – 67%
– Canadian Tire (CTC.A) – 67%
– Tim Hortons (THI) – 66%
– Cogeco Cable (CCA) – 66%
If we look at the ratios of the companies compared to Tim Hortons, all of them trade at a discount to their intrinsic value (P/IV below 1). Their economic performance indexes (EPI) are greater than 1 (wealth creator because the return on capital (ROBC) is greater than the cost of capital (COC)) but not quite as high as Tim Hortons 4x EPI. All in all, these companies could be worth taking a closer look at if you want to reinvest your Tim Hortons proceeds in the consumer discretionary sector.
