What are we looking for?
Beaten-up stocks that analysts believe will grow profits this year.
With the S&P 500 within 1.4 per cent of its all-time highs (and the S&P/TSX composite further away, thanks to the plunge in oil prices), investors might be finding it difficult to find value in equity markets.
The share prices of companies on this list, however, are all within 5 per cent of their 52-week lows.
A stock's decline in price does not necessarily make it less expensive. Canadian energy producers, which have seen earnings estimates collapse due to tumbling oil prices, are a fine illustration of this point.
According to analysts, companies on this list are also expected to produce positive year-over-year growth in earnings per share in 2015.
Since overall earnings growth will be hard to come by for the benchmark American index, companies that are able to boost profits this year stand a solid chance of being rewarded by the market they are able to make good on this projected bottom-line growth.
How did we do it?
On Tuesday morning, we used Bloomberg to screen for stocks listed on the Toronto or New York Stock Exchanges that are within 5 per cent of their 52-week lows. The consensus among analysts is that these firms will see earnings rise this year.
To avoid smaller, more thinly traded companies, we screened for stocks with a market capitalization above $1-billion.
The prices of these stocks are denominated in Canadian dollars, and thus reflect what domestic investors would have to spend to purchase them.
What did we find?
The Canadian financials continue to be out of favour, a reflection of dimming prospects for the domestic economy.
The most recognizable names to Canadian investors will no doubt be the big banks: Bank of Montreal and Bank of Nova Scotia.
Both of these lenders reported first-quarter adjusted profits that fell short of analysts' expectations, but offer dividend yields well above the coupon payments available from government bonds and trade at discounts to their long-run price-to-earnings ratios.
For investors looking to add international exposure, there are two American depositary receipts in this group: Chile-based Embotelladora Andina, and Grana y Montero of Peru. The former is engaged in the production and sale of beverages, while the latter is an infrastructure, construction and engineering conglomerate.
As always, investors are advised to do their own research before investing in any stocks listed here.