Performance Review
Below is the performance of the stocks found on our January 15, 2014 watch list.
| Symbol | Name | 2014 | 2015 | % change |
| FTS.TO | Fortis Inc. | 30.41 | 39.29 | 29.20% |
| CUF-UN.TO | Cominar REIT | 18.43 | 19.31 | 4.77% |
| D-UN.TO | Dundee REIT | 29.63 | 26.72 | -9.82% |
| FCR.TO | First Capital Realty Inc. | 17.45 | 19.5 | 11.75% |
| CWT-UN.TO | Calloway REIT | 25.32 | 30.14 | 19.04% |
| REI-UN.TO | Riocan REIT | 24.98 | 28.86 | 15.53% |
| ESI.TO | Ensign Energy Services Inc. | 16.22 | 9.44 | -41.80% |
| CAR-UN.TO | Canadian Apt Properties REIT | 21.51 | 27.12 | 26.08% |
| EMA.TO | Emera Incorporated | 31.17 | 39.44 | 26.53% |
| TA.TO | TransAlta Corp. | 13.95 | 10.85 | -22.22% |
| LB.TO | Laurentian Bank of Canada | 46.29 | 47.49 | 2.59% |
| CU.TO | Canadian Utilities Ltd. | 36.65 | 41.69 | 13.75% |
| Average | 6.28% |
At the time, we re-ranked the stocks based on the projected price change using analyst earnings estimates. In our analysis we said the following:
“Through a process of elimination, we would start with the stocks that are expected to decline the most in value over the next year.”
The chart below shows how the analyst estimates in blue varied dramatically compared to the actual performance in red after a year.
Again, the analyst estimates of earnings and our projections indicate that analysts will typically over-estimate the upside and downside prospects for a company. In addition, analysts often mirror the current market sentiment for a company rather than take a view that comes in conflict with prevailing “wisdom.” In many respects, this allows for better anticipation of company prospects, provided the market retains its bullish mood.
Canadian Dividend Watch List: January 13, 2015
Below are the thirteen Canadian companies that are on our radar with the analyst estimates for the coming year.
| symbol | name | price | p/e | eps | yield | p/b | % from yr low |
| IMO.TO | Imperial Oil Ltd. | 44.86 | 9.12 | 4.9 | 1.08% | 1.72 | 0.40% |
| PSI.TO | Pason Systems Inc. | 18.45 | 16.93 | 1.06 | 3.04% | 3.69 | 0.87% |
| FTT.TO | Finning International Inc. | 21.87 | 12.36 | 1.75 | 3.10% | 1.9 | 0.92% |
| ESI.TO | Ensign Energy Services Inc. | 9.44 | 11.24 | 0.84 | 4.86% | 0.7 | 1.51% |
| TD | The Toronto-Dominion Bank | 43.41 | 12 | 3.5 | 3.60% | 1.75 | 1.85% |
| BDT.TO | Bird Construction Inc. | 10.3 | 15.15 | 0.68 | 6.92% | 2.5 | 1.88% |
| AGF-B.TO | AGF Management Limited | 7.48 | 11.51 | 0.65 | 14.36% | 0.68 | 2.19% |
| CCO.TO | Cameco Corporation | 17.65 | 39.22 | 0.45 | 2.13% | 1.36 | 2.32% |
| PPL.TO | Pembina Pipeline Corporation | 37.23 | 32.95 | 1.14 | 4.37% | 2.48 | 2.68% |
| CNQ.TO | Canadian Natural Resources | 31.94 | 11.09 | 2.87 | 2.71% | 1.24 | 3.03% |
| GS.TO | Gluskin Sheff + Associates, Inc. | 24.64 | 6.75 | 3.53 | 3.54% | 6.05 | 3.23% |
| CWB.TO | Canadian Western Bank | 28.29 | 10.36 | 2.7 | 2.86% | 1.42 | 3.32% |
| BNS.TO | The Bank of Nova Scotia | 61.92 | 10.88 | 5.67 | 4.25% | 1.68 | 3.34% |
Analyst Estimates
Below is a snapshot of the analysts estimated earnings assuming a price-to-earnings ratio of 15 (in blue) for the next 12 months and the percentage change in price that is implied based on these low earnings estimates. Additionally, we’ve included the estimated price change if the stock retained the same P/E ratio as on January 13, 2015 (in red). The more conservative approach and our recommended ranking is based on the stocks with a P/E ratio of 15x.
Watch List Summary
As the number of stocks on our list has increased to 23 companies, we felt it was necessary to narrow the field down to a more manageable size. In spite of this fact, we couldn’t help but run Edson Gould’s Altimeter on a company that would have otherwise made the cut. The company in question is Computer Modelling Group (CMG.TO) which is described by Yahoo!Finance as follows:
“Computer Modelling Group Ltd. develops and licenses reservoir simulation software to oil and gas companies, consulting firms, and research institutions worldwide. Its products include IMEX, a reservoir simulator that models conventional black oil reservoirs; GEM, a general compositional reservoir simulator for modelling processes, such as gas condensates, volatile oils, gas cycling, WAG processes, and other multi-component reservoir; STARS, a thermal, K-value compositional, chemical reaction, and geomechanics reservoir simulator used for modelling recovery processes; and CMOST, which enhances and accelerates sensitivity analysis, history matching, optimization, and uncertainty analysis.”
Gould’s Altimeter has the following outline:
As always, our focus is the most conservative perspective possible. In this case we are interested in the downside risk going forward. On the whole, the most consistent downside target (so far) has been the $10.50 level. Afterwards, we’d be looking for the $9.30 level. In the worst case scenario, we see the $7.10 level.
As Computer Modelling Group is heavily associated with the oil, gas and mining sector, currently experiencing a drubbing at the hands of lower oil prices, there is good reason to believe that the stock could go as low as $7.30. However, the most compelling element of Computer Modelling Group is the fact that the services they provide are, or could become, applicable to other industries. Therefore, we wouldn’t rule out this company’s prospects over the long-term.