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Hard at work on the 11th annual MoneySense Top 200
I’m hard at work on the 11th annual MoneySense Top 200, which will appear in the December 2014 edition of the magazine, due out Nov. 12.
I have to confess that it’s something of a minor miracle the feature has survived as long as it has. After all, the big crash of 2008 shook the faith of investors and it sent many businesses into turmoil. But, through thick and thin, everyone at MoneySense has been very understanding and supportive of the project.
While I know you’re eager to see this year’s list of top stocks, please be patient. It’ll be out soon. Until then, I thought you might like to see a little bit of what goes on behind the scenes.
This week I’ll focus on how we pick the stocks that go into the Top 200.
The process we use is simple enough. We opt for the largest 200 stocks that trade on the TSX. But we don’t use market capitalization (number of shares times price per share) as our measure of size. Instead we use revenue (over the last 12 months) as our guide.
As a result, the Top 200 skews away from resource firms that haven’t started producing anything and toward operating companies that actually sell products and services. That suits us just fine. After all, we prefer profitable firms that pay dividends.
Why did we opt for 200 stocks? While we are constrained by the amount of space available in the magazine, more importantly, there aren’t many reasonably-sized Canadian stocks to begin with.
If you sort the TSX by revenue, you’ll find only 34 companies with sales (over the last 12 months) of more than $10 billion. A mere 132 have revenues between $1 billion and $10 billion. The 200th stock on the list generates only $0.7 billion in sales.
Alternately, if you sort the TSX based on market capitalization, you’ll find 45 large-cap firms that trade for more than $10 billion. Some 183 companies trade in the mid-cap range between $1 billion and $10 billion.
In other words, the Top 200 focuses primarily on large-cap and mid-cap stocks. While a few smaller fry sneak in, we like to stick with bigger firms.
Next time I’ll take a look at some of the tests we use in the Top 200 and highlight a few that were particularly hard to pass this year.
Here’s the updated Safer Dogs of the TSX, representing the top yielders as of Oct. 27. The list is a good starting point for those who want to put some money to work this week. Just keep in mind, the idea is to hold the stocks for at least a year after purchase–barring some calamity.
| Name |
Price |
P/B |
P/E |
Earnings Yield |
Dividend Yield |
| BCE (BCE) |
$49.11 |
3.41 |
18.53 |
5.40% |
5.03% |
| Husky Energy (HSE) |
$27.11 |
1.28 |
13.16 |
7.60% |
4.43% |
| Rogers (RCI.B) |
$42.82 |
4.20 |
16.16 |
6.19% |
4.27% |
| Potash Corp (POT) |
$37.95 |
3.21 |
21.70 |
4.61% |
4.14% |
| Power Corp (POW) |
$28.97 |
1.26 |
12.54 |
7.97% |
4.00% |
| CIBC (CM) |
$101.32 |
2.36 |
12.79 |
7.82% |
3.95% |
| Bank of Nova Scotia (BNS) |
$67.95 |
1.87 |
11.52 |
8.68% |
3.89% |
| Shaw (SJR.B) |
$28.38 |
2.97 |
15.42 |
6.48% |
3.88% |
| Bank of Montreal (BMO) |
$81.88 |
1.75 |
12.62 |
7.93% |
3.81% |
| TELUS (T) |
$39.94 |
3.01 |
17.67 |
5.66% |
3.81% |
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