Figure 4 - High ROE Stocks in Canada - Based on 2014 DKAM estimates

Rank Company Ticker Industry Mkt Cap ($MM) ROAE*

1 Constellation Software CSU Technology/Software 4897.7 55%
2 Gluskin Sheff GS Asset Manager 829.1 52%
3 Macdonald Dettwiler MDA IT/Space/Technology 2862.0 37%
4 Valeant Pharma VRX Pharma 50879.0 35%
5 Avigilon AVO Technology/Software 1095.7 35%
6 Intertape Polymer ITP Tape 755.5 31%
7 Yellow Media Y Advertising 769.1 30%
8 First Service FSV Services 1382.1 28%
9 Tim Hortons THI Donuts and coffee 8129.0 27%
10 Auto Canada Inc ACQ Auto-Finance 940.7 24%
11 CGI Group GIB.A IT services 10807.3 24%
12 Rogers Communications RCI.B Telecoms 24591.3 24%
13 Mitel Networks MNW Network 1099.8 23%
14 Alimentation Couche-Tard ATD.B Convenience Stores 14979.9 22%
15 MTY Foods MTY Food franchising 610.7 22%
16 Element Financial EFN Financial Services 2109.4 21%
17 Open Text OTC Software 5859.4 21%
18 Home Capital Group Inc. HCG Specialty Lender 2777.0 21%
19 Saputo SAP Milk and cheese 10771.0 21%
20 High Liner Foods HLF Fish 717.3 20%
21 Dollarama DOL Retailing 6261.8 20%
22 Enghouse ESL Software 880.2 20%
23 Badger Daylighting BAD Industrial (Daylighting) 1173.2 20%
24 Norbord NBD Forest Products 1318.0 20%
25 Canadian Pacific Railway CP Railways 28235.3 20%
* return on average equity, based on cash earnings and adjusted for dividends

Figure 4 a gives us a good idea of what kinds of companies are performing

well in 2014 but it doesnt address valuation. In figure 5 below, we rank the
same list of 25 companies from cheapest to most expensive in terms of P/E
ratios. As is the case each year when we present this list, there are always a
few companies trading at remarkably low P/E ratios and a few that appear to
be quite expensive.

ROE REPORTER | DKAM 6