< Successful investing on the Canadian stock exchange
As an Australian citizen living in Canada, Dennis Best has found top stocks to buy outside the ASX. With the help of Skaffold’s research for around 300 Canadian stocks, he was enjoyed an average share price appreciation of 25 per cent. And that’s before including dividends and tax credits!
Dennis likes to buy good companies and hold them for as long as they continue to perform well.
For Dennis, top stocks produce stable and increasing earnings, high return on equity, have a history of steady or increasing dividends, low share price volatility and low debt. For a stock to make it into his portfolio, it must have a demonstrated history of stable and increasing earnings.
When it comes to finding top stocks to buy, Dennis relies on Skaffold. “Skaffold is essentially a big database that allows me to quickly screen global stocks to find top stocks that meet my investment criteria”, he said.
Dennis uses Skaffold’s find to find the right stocks for his portfolio. “My filter setting are a Skaffold Score of A1 or A2, Small to Large Market Cap, and no gold, silver, or mining stocks. I also insist on a return on equity (ROE) greater than 15%, Safety margin (discount) greater than 0%, Forecast change in Intrinsic value greater than% and Net debt to equity ratio less than 25%”, Dennis revealed.
After using Skaffold’s powerful filter to reduce the stock market to just a handful that meet his strict investment criteria, Dennis looks at each company and its fundamentals in closer detail.
“I check how many analysts are covering the company, and use the Value vs Price chart to find the companies with the greatest upside. I will rule out some of the companies due to their sector or type of business. I use Skaffold’s Compare tool when I’m down to the last few.
“I also like the Pros and Cons for a quick review of the good and bad points about a business. My favourite Evaluate screens are Earnings, Dividends, Capital History, and the Skaffold Score. The Earnings screen gives a pretty good assessment of both the stability of past earnings and future growth, although it can’t be used in isolation from the other screens. I need them all to gain an overall understanding of the business”, Dennis said.
Dennis’s top performing portfolio in 2013
Skaffold: Which stocks made it into your top performing portfolio?
Dennis: In the Canadian market, in 2013, I bought Toronto-Dominion Bank (TD), Royal Bank of Canada (RY), Bank of Nova Scotia (BNS), Great-West Lifeco (GWO), Badger Daylighting (BAD), Saputo (SAP), and WestJet Airlines (WJA).
Skaffold: How did you construct the portfolio?
Dennis: Usually equal weighting across stocks.
Skaffold: How did you manage the portfolio throughout its life?
Dennis: I normally buy and hold, but in the case of Saputo, I bought when it had an A2 rating, and sold it a few months later when its Skaffold Score dropped to a B3.
Skaffold: What were the results?
|Symbol||Name||Date Bought||Price Paid||Price on 17-Jan-14||Share Price Appreciation||Current Dividend Yield||Percent Franked|
|TD||TD Bank||5-Apr-13||80.99||98.11||21.1 %||3.5 %||100 %|
|RY||Royal Bank||9-Oct-13||66.40||71.86||8.2 %||3.7 %||100 %|
|BNS||Bank of Nova Scotia||5-Apr-13||57.15||63.86||11.7 %||3.9 %||100 %|
|GWO||Great West Life||27-May-13||28.96||32.20||11.2 %||3.8 %||100 %|
|BAD||Badger Daylighting||27-May-13||49.89||95.60||91.6 %||1.1 %||100 %|
|SAP||Saputo||27-May-13||52.48||52.55||0.1 %||1.6 %||100 %||
Sold on 11 Sep 2013 for $47.65
|WJA||Westjet Airlines||7-Jan-13||20.20||27.08||34.1 %||1.5 %||100 %|
|Average||2.7 %||100 %|
Note: Canada has a Dividend Tax Credit which is more or less the same as the Australian Franking Credit. It is applicable to Canadian resident taxpayers only.
Skaffold: One last question for the viewers at home… what stocks are on your 2014 watchlist?
Dennis: There are numerous excellent opportunities in the US and Canadian markets – especially in the US. Financial stocks in Canada (banks and insurance) appear to be doing well in a rising interest rate environment. I recently purchased a few shares in QUALCOMM, Inc (NASDAQ:QCOM) on the US market, and these are up about 2.5% in the past month.
Data accurate as at 17 January 2014 close of trade.
Nothing in this article constitutes advice. Investing in the stock market involves a degree of risk. Investments can go up and down and may result in the loss of some or all of your capital, and reduced dividend income. Past performance is not a reliable indicator for future performance. Future portfolio performance returns may differ from past returns. Portfolio returns are prepared in good faith and we accept no liability for errors or omissions.
Top global stocks for 2014 – free webinar 19 February @ 1pm
If you are interested in expanding your portfolio to include global stocks, make sure to register for our free webinar Top global stocks for 2014. Click here to secure your place at the webinar.
Skaffold Members may also be interested in reading Skaffold’s methodology for finding great companies which was shared in a recent blog post.