What are we looking for?
The past 10 days have seen significant volatility in the Canadian market with many stocks now trading 10 per cent or more off their highs of just a few weeks ago.
Canadian financial stocks have been particularly hard hit, despite strong earnings reports by many of the major banks. No one knows the short-term direction of stocks, but financial stocks have been strong long-term performers and now may be an opportunity to find great companies trading significantly off their recent highs.
The screen
We will be using Recognia Strategy Builder to search for Canadian financial stocks trading significantly lower as a result of recent market volatility.
We begin by setting a minimum market cap threshold of $5-billion to focus on the largest companies in the market. Next, we will look for companies with stock prices down at least 7 per cent in the past four weeks.
We will also require that these stocks have made a new 52-week low in the past two weeks.
Finally, to focus on stocks that are poised to grow their businesses this year in spite of stock market volatility, we will filter on stocks with an analyst projected earnings per share growth rate this year of at least 10 per cent.
More about Recognia
Recognia is a global leader in automated quantitative analysis and engagement solutions for retail online brokers and institutions.
Recognia's product suite provides actionable trading ideas based on technical and fundamental research covering stocks, ETFs, indexes, forex, options and commodities.
What did we find?
CI Financial the smallest company on our list with a market cap of $8.5-billion. CI Financial is a diversified wealth management firm and one of Canada's largest fund management companies.
With a projected EPS growth rate of 39.6 per cent this year, CI is poised to outpace many of its peers in earnings growth.
Power Financial Corp. is a financial services holding company for assets such as Great-West Life, London Life and Investors Group. Since hitting a 52-week high back in March, the stock has declined about 20 per cent and reached a new 52-week low of $29.06 on Aug. 24.
Bank of Nova Scotia is the largest company on our list with a market cap of $70-billion. The stock is off 8.5 per cent in the past four weeks and sank to a new 52-week low on Aug. 24.
On Aug. 28, the company reported third-quarter results that topped analysts' expectations for both revenue and earnings.
The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Recognia Inc. in respect of the investment in financial instruments.
Investors should conduct further research before investing.
Peter Ashton is vice-president of retail and self-directed investing at Recognia Inc.