What are we looking for?
The new darlings of Bay Street.
The first correction on the S&P/TSX composite index in almost three years produced a wave of reratings from sell-side analysts.
Formerly richly valued stocks became bargains, sells became buys, while others resilient to the selloff became expensive by comparison.
The subsequent rebound further shuffled the deck, resulting in a new order of top-ranked stocks.
So, with the correction possibly over, or at least paused, we went looking for the stocks that have come to garner the most analyst support.
How did we do it?
We're looking for stocks with the highest possible analyst recommendations. Bloomberg calculates an average rating on a scale of one to five, where one represents a "strong sell" and five represents a "strong buy." We set a minimum score of 4.5.
Next, we sought to filter out companies that are too small, as well as stocks with scores skewed by the bullish opinions of too few analysts.
So we set a minimum market capitalization of $500-million, and required eligible stocks to be covered by at least 10 analysts issuing recommendations.
And finally, to help isolate those stocks with attractive valuations, we capped the price-to-earnings ratio at 20 times.
What did we find?
Plenty of beaten-down energy stocks.
The energy sector was the worst performer on the way down, exceeding the main index's losses of 11.4 per cent from its record high on Sept. 3 with a decline of almost 20 per cent.
The energy sector has also ranked dead last through the rally over the past two weeks since the index bottomed out and climbed by about 5 per cent.
So it makes sense that many analysts see several buying opportunities among energy names, even as oil prices continue to fall.
As always, further research would be required to determine which, if any, of these stocks the analysts are right about.