Stock Watch List for January 2016

January 2015 Stock Watch List

As January has come around, I’ve made a handy little stock watch list for the companies which I have an interest in or are closely comparable to companies which I’m interested in.

I’d really like to set up a watch list at the beginning of every month so I’m not looking around as stocks fall without knowing which are the best to buy; such as this morning when the markets were incredibly volatile only to relax a little later in the evening, at least on the Toronto Exchange.

I’ve colour-coded my table here for easy reading… The things I really like about these stocks are marked in green, and the things I’d like to avoid are in red…

For example, things I really like are:

  • P/E below 10
  • Yield above 4.00%
  • Payout ratio below 50%
  • 5-Year Yield Growth above 10%

Things I don’t like are:

  • P/E above 20
  • Payout Ratio above 80%

The companies which have added up to 3 or more points (things I like – things I don’t like) have their names highlighted in green.

January 2016 Stock Watch List

Company Current Price P/E (TTM) Years of Div. Growth Div Yield 5 Year Div Yield Avg 5 Year Div Growth Rate Payout Ratio Profit Margin
Loblaws 64.84 36.4 4 1.54% 2.02% 3.03% 54.55% 1.62%
Metro 38.56 19.12 21 1.22% 1.99% 14.70% 23.81% 4.25%
Empire Company Ltd 25.55 19.87 21 1.57% 1.44% 7.86% 29.41% 1.55%
George Weston Ltd 105.29 27.31 3 1.61% 1.93% 3.07% 54.64% 1.99%
Canadian National Railway 76.47 17.99 20 1.63% 1.52% 14.64% 27.67% 27.20%
TransCanada Corp. 45.29 19.21 15 4.59% 3.78% 4.78% 86.34% 17.71%
Royal Bank of Canada 73.04 10.86 5 4.33% 3.91% 9.02% 45.64% 28.39%
Bank of Nova Scotia 55.54 9.79 5 5.04% 3.97% 6.77% 47.69% 29.99%
Canadian Imperial Bank of Commerce 91.72 10.33 5 5.02% 4.34% 4.32% 48.37% 25.91%
Toronto-Dominion Bank 53.72 12.75 5 3.8% 3.49% 10.39% 47.36% 27.41%
Bank of Montreal 76.66 11.65  3 4.38% 4.32% 2.96% 49.07% 24.29%
Canadian Western Bank 23.51 9.11 24 3.91% 2.29% 13.81% 33.24% 35.20%
Agrium 124.04 14.88 5 3.92% 1.37% 94.09% 54.98% 5.68%
Thomson Reuters 51.76 14.96 22 2.59% 3.63% 3.34% 52.89% 16.66%
Alaris Royalty Corporation 23.65 15.94 8 6.85% 5.39% 9.43% 99.70% 69.18%

Now that’s a pretty big list of interesting stocks, however I’m planning to primarily focus on watching the four winners of this round for January:

  1. Metro Inc (TSE: MRU)
  2. Canadian National Railway (TSE: CNR)
  3. Bank of Nova Scotia (TSE: BNS)
  4. Canadian Western Bank (TSE: CWB)

Both Metro Inc and Canadian National Railway are quite expensive in terms of P/E, more so in relative terms to Bank of Nova Scotia and Canadian Western Bank.

I’ve had my eyes on Metro for a long time, especially considering how inflated food prices are becoming in Canada. It’s absolutely insane. This will be good for increased upcoming earnings, but I’d really like for the stock to come down in price.

Canadian National Railway also has a pretty high P/E, and it seems to have had a very volatile year. In this case, I think I can wait for the volatility to subside before jumping in.

While both MRU and CNR have 20+ years of dividend growth, and double digit 5-year dividend growth rates, the measly dividends of 1.22% and 1.63% are not very compelling. I’d like for the prices to drop enough for the yield to surpass 2.00%.

Bank of Nova Scotia is sporting a yield over 5%, which is very attractive to a dividend investor. It’s trading cheaply with a P/E of 9.79. I’ve previously invested in BNS, and am currently down roughly 15%. While the stock is still down, I’d like to average my cost basis down at the same time and reduce the ache. After all, it’s a solid company that will stand strong for decades (or centuries). I would like to invest in BNS if I were to average down on an existing position this month.

Canadian Western Bank appears to be the creme of the crop for me for the month of January. Incredibly cheap at a P/E of 9.11 after being hammered for it’s relation to oil and Western Canada. However, the company has increased dividends for a solid 24 years and a low payout ratio of 33.24%, signaling that the dividend is incredibly safe and can be increased for years to come. I would like to invest in CWB if I were to open a new position this month.

2 Replies to “Stock Watch List for January 2016”

  1. Thanks for the list DB. Some awesome companies on the TSX for sure since our loonie is so crap against the Dollar.
    Love the stock picks and I would definitely buy the 4 you’re thinking. Food is insane now, luckily we are preparing for the worst which is to come.
    I like CWB a lot as it’s extremely valued. I bought 300 shares of it and would love to add another 300 shares this year. BNS is over 5 divy yield right now… Awesome to average down. CNR is gonna be a stock I will up my stakes later this year to a 20k position. I’m sick of KMI or ESV which cut their divies on me and I’m done with High Yielders.
    Keep it up bud, I’m with you and let’s hustle hard and make our future selves proud. Cheers my friend.

    1. Hey DH,

      You’re very welcome. There are indeed a decent amount of deals floating about the TSX with all the volatility.

      I’m glad we’re in agreement with the 4 stock winners for January. I’d like to add to CNR too once the yield fattens up a bit hopefully. I’ll be comparing BNS and CWB in greater detail in a soon-to-be post so that I can make the best decision.

      I’ve wanted to invest in KMI for a long while before the dividend cut news, so glad I hadn’t now.

      Best regards,

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