Two Canadian stocks for turbulent times

These companies have stable earnings that make them attractive in volatile markets, according to CPMS data.

Catherine Multon 2 November, 2015 | 6:00PM
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Stable, growing earnings and stock prices that show resilience to market downturns are highly desirable characteristics, especially in volatile periods such as those we've experienced in the recent past.

Metrics tracked in the Canadian equity universe by Morningstar's CPMS division help assess the predictability of corporate earnings. One such metric, "earnings variability rank" measures the volatility of a company's reported earnings per share on a quarterly basis, using the company's entire history of quarterly earnings. It also calculates by how much (or how little) quarterly earnings tend to miss the consensus estimate.

Another key variable employed in assessing stocks is the covariance of the current-year earnings estimates, or spread in estimates. This indicates which stocks exhibit a high degree of consensus among the analysts' earnings estimates, or a "tight spread" of the estimates. If the analysts' estimated values are close together, there is less uncertainty, and therefore less perceived risk in owning the stock.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Sun Life Financial Inc57.04 USD0.62Rating
Transcontinental Inc Class A19.71 CAD-0.30

About Author

Catherine Multon

Catherine Multon  Catherine Multon is a contributing writer for Morningstar Canada.

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