In the filter created this week for The Globe and Mail, we screened for high quality Canadian stocks with low volatility by using the following criteria:
- A market capitalization of $500-million or more;
- A beta of one or less. A stock with a beta less than one is considered less volatile than the market;
- A return on capital greater than or equal to 12 per cent, reported as of last quarter’s end;
- A cost of capital less than 10 per cent, reported as of last quarter’s end;
- A positive sales change over 12 months and 24 months;
- A positive free-cash-flow-to-capital ratio. This ratio gives a sense of how well the company uses the invested capital to generate free cash flows, which could be used to stimulate growth, distribute or increase dividends, reduce debt, etc. A positive figure is what we are looking for. (Note: Some FCF/capital ratio data were not available.)
- Dividend-paying companies with a payout variation greater than or equal to zero in each of the past four years (not shown);
- A positive share-price return over one year.
Read more in this article written by Noor Hussain, Account Executive at Inovestor Inc.
