Finding Canadian stocks with value, stability and growth

What are we looking for?

Canadian-listed stocks that appeal to value-focused investors based on fundamental and quantitative metrics.

We used Trading Central Strategy Builder to identify financially stable Canadian-listed companies with strong earnings potential, attractive valuations and consistent income generation. By focusing on stocks with low debt levels, competitive dividend yields, and earnings yields exceeding market averages, the approach emphasizes value while mitigating downside risk.

The screen

We begin by setting a minimum market capitalization threshold of $1-billion to focus on larger, more established companies, reducing the volatility often associated with smaller stocks and ensuring the inclusion of stocks with significant market presence.

Next, we screen for a maximum debt-to-equity ratio of 1, highlighting companies with manageable levels of debt relative to their equity. This metric helps identify financially stable firms that are better equipped to handle economic uncertainties.

For valuation, we include a minimum earnings yield to prioritize stocks offering higher earnings relative to their share price, a key measure for identifying undervalued opportunities. Additionally, we screen for companies with a price-to-earnings (P/E) ratio below 18, allowing us to spotlight stocks with valuations below the broader market average.

A minimum dividend yield of 3 per cent is applied to identify stocks offering attractive income potential, appealing to investors seeking reliable returns in the current market environment.

The screen also incorporates price performance over the past year and year-to-date, alongside the Trading Central Momentum Factor to identify companies showing strength or upward momentum in their stock prices. This approach ensures the selections highlight stocks that have outperformed their peers.

More about Trading Central

Trading Central is a global leader in financial market research and investment analytics for retail online brokers and institutions. Its product suite provides actionable trading ideas based on technical and fundamental research covering stocks, exchange-traded funds, indexes, forex, options and commodities. Strategy Builder, our stock screener, is available through leading retail brokers in Canada and worldwide.

What we found

Topping our list is Manulife Financial Corp. MFC-T, a leading Canadian insurance and financial services company with a global presence. The stock has a TC Momentum Factor Rating of 93 out of 100, reflecting very strong momentum in terms of price trend and investor interest compared with its industry peers. The TC momentum factor refers to the tendency of winning stocks to continue performing well in the near term. With a price-to-earnings ratio of 15.85, Manulife’s one-year performance increase stands at 70.4 per cent, while year-to-date gains amount to 53.6 per cent.

Next is Pembina Pipeline Corp. PPL-T, a key player in the Canadian energy infrastructure sector, specializing in pipeline transportation and midstream services. Pembina also has a TC Momentum Factor Rating of 93 and offers an attractive dividend yield of 4.78 per cent, appealing to income-focused investors. With a price-to-earnings ratio of 17.56, Pembina’s one-year performance increase is 28.3 per cent, with year-to-date gains of 26.6 per cent.

Sun Life Financial Inc. SLF-T, a global leader in insurance and wealth management solutions, has a strong TC Momentum Factor Rating of 86, paired with a low debt-to-equity ratio of 0.25, highlighting its financial stability. With a price-to-earnings ratio of 13.96, Sun Life’s one-year performance increase is 25 per cent, while year-to-date gains total 24.9 per cent. The stock is trading at record highs this week.

The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Trading Central in respect of investing in financial instruments. Investors should conduct further research before investing.

Gary Christie is head of North American research at Trading Central in Ottawa.