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WHAT ARE WE LOOKING FOR? Canadian companies that excel at creating wealth for shareholders, especially ones that have attractively priced shares. TODAY'S SCREEN The people at the Montreal-based analysis firm Stockpointer (stockpointer.ca) have built us a list of dividend-paying stocks and income trusts that score well using a wealth creation measure called Economic Value Added (EVA). With EVA, you compare a company's profit (very strictly defined, with no accounting trickery) against the costs of generating that profit. Stockpointer uses an Economic Performance Index to compare the EVA of companies across all kinds of sectors. The index ranks stocks according to the ratio between their return on capital and their cost of capital, which means both debt and shares. A company needs a score of one or greater to be considered a creator of wealth for shareholders. What's the investment benefit of using the Economic Performance Index? Stockpointer says its top 25 Canadian mid-sized companies as ranked by the index have returned 18.7 per cent annually since 2000, compared to just under 6 per cent for the S&P/TSX composite index. To help highlight potential bargains among top wealth-creating stocks, we have included the ratio of share price to intrinsic value, which shows whether a stock is trading above or below its value according to EVA. WHAT WE FOUND Lots of financial stocks, which should reassure investors who have been nervous about bargain-hunting in this hard-hit sector. EVA analysis tells us that names like Bank of Nova Scotia, Royal Bank of Canada, Manulife Financial and Industrial Alliance are top wealth creators. Meanwhile, the ratio of stock price to intrinsic value suggests these stocks are at least somewhat cheap. The champion of undervalued stocks on today's list has to be Power Financial, which is a holding company for the likes of IGM Financial and Great-West Lifeco (notice their appearance on the list as well). The plethora of income trusts on our list is also notable. Is it possible that investors are being too hard on trusts out of fear of the new trust tax that arrives in 2011?

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