Quantamental approach uncovers outperforming Canadian stocks

By

Gary Christie

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June 4, 2024

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4

Min Read

What are we looking for?

Top Canadian-listed stocks using Trading Central’s quantamental rating methodology.

The S&P/TSX Composite Index has slightly retreated from its recent peak on May 21. Market participants are closely monitoring the critical support level at 21,500. Our team employed our quantamental methodology to identify top outperforming Canadian stocks that could potentially contribute to fresh record highs in the index as long as the index remains above its support level.

The screen

We used Trading Central Strategy Builder to identify Canadian-listed stocks trending higher based on price performance and quantitative analysis. We focused on stocks with a TC Quantamental Rating between 55 and 100, to exclude stocks indicating weak quantamental factors. Quantamental factor investing combines quantitative and fundamental analysis to enhance returns, improve portfolio diversification, or reduce risk. The TC Quantamental Rating uses a combination of valuation, growth, quality, price momentum and income as key factors when ranking a company.

Additionally, we set a minimum market capitalization threshold of $1-billion to target larger, established companies.

Our screening also considered stocks trading within seven days of a new 52-week high, indicating positive price momentum and investor interest.

For reference, we included individual quantamental factor scores, dividend yield, year-to-date performance, and one-year price performance.

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

Stocks with attractive quantitative characteristics

Gold mining company Kinross Gold Corp. K-T has taken the spotlight, securing the top position on our list. The stock recently hit a new 52-week high on Tuesday and has been steadily trending upward since breaking through key resistance at $8.35 last month. As long as the stock price remains above its 20-day moving average near $10.50, we anticipate the bullish trend to persist. Notably, Kinross boasts an impressive TC Quantamental Rating of 74 out of 100, the highest on our list. This strong rating is attributed to exceptionally high growth and momentum factors, scoring 93 and 85, respectively.

Energy company Suncor Energy Inc. SU-T -2.95% has the largest market cap on our list at $70-billion. The stock’s highest quantamental factor is momentum at 90 out of 100, which is no surprise. The stock price has been trending higher since it broke above key resistance in March near the $46.50 price level and is currently trading within approximately 3 per cent of its record high from last week.

Dollarama Inc. DOL-T, a retail stock, stands out as one of just two stocks on our list that are not in the oil and gas or metals and mining sectors. Throughout the year, it has maintained an upward trajectory, achieving a 29.2 per cent year-to-date gain. Its strong momentum persists, supported by an impressive 88 out of 100 TC momentum factor rating.

Trading Central Strategy Builder provides a back-testing 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 14 per cent annualized return compared with 7 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.

Gary Christie

Head of North American Research
Gary has over 15 years in financial markets. Prior to joining TC, he served as an equity & derivatives specialist with TD Bank and Bank of America. Gary is regularly quoted in Bloomberg News, conducts many education and market outlook webinars for investment institutions all over the world and has been a guest speaker at the New York Traders Expo.
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