The holidays are near at hand and Canadians are busy with all manner of preparations, which distract them from hunting for bargains in the stock market. But the holiday period can be a fine time to load up on attractive stocks.

We’re pleased to lend a hand to harried stock shoppers with our guide to the top 250 stocks in Canada. It contains a wealth of data on each one along with two star ratings for their attractiveness as momentum and value investments. The team of 20 Megastars offers the best of both worlds.

The Megastar portfolio jumped 39.4 per cent from Dec. 11, 2024, to Dec. 10, 2025, and beat the Canadian stock market (as represented by the S&P/TSX Composite Index), which climbed 26.1 per cent over the same period. The jolly returns added to those from prior years, with the Megastar portfolio climbing at an average annual rate of 33.3 per cent from Dec. 1, 2022, to Dec. 10, 2025, while the market advanced at an annual rate of 18.9 per cent over the same period.

The gains assume an equal-dollar amount of each of the 20 Megastars was purchased and the proceeds moved into the new team each year. (The raw data used herein largely comes from Bloomberg and is supplemented by data from S&P Global Market Intelligence. All of the returns include dividend reinvestment, but not fund fees, taxes, inflation, commissions and other trading costs.)

We back-tested the star system behind the Megastars to see how it performed over the long term, with excellent results. The portfolio gained an average of 15.9 per cent annually over the 26 years to the end of November, 2025, when an equal-dollar amount was put into each stock and the portfolio rebalanced monthly.

It climbed by an average of 16.7 per cent annually over the same period when rebalanced yearly. In comparison, the market index gained an average of 8.5 per cent a year over the same period.

We hope you’ll enjoy our new team of Megastars. You can learn more about them, and our star system, below.

Shooting stars

We use a numbers-based approach to find attractive stocks. The goal is to discount intuitions and speculations about a company’s prospects and to employ quantitative factors that have been shown to be successful over the long-term – and that will hopefully continue to generate profits for investors for years to come.

Each stock is measured up for its merit as a momentum investment using four factors and again on its attractiveness as a value investment using another four factors. The Megastar team combines all eight factors to unearth bargain stocks that show signs of improvement.

We focus on the largest 250 common stocks on the Toronto Stock Exchange by market capitalization that have at least 12 months of trading history in an effort to highlight reasonably sized companies with enough data to examine properly. Along the way, we try to bypass companies in the process of being purchased by another (and other oddities) because they deserve more specialized consideration.

A feast of gainers

Momentum investors like to buy stocks on the upswing with the expectation they’ll continue to shoot higher – at least in the near term. The idea is to take a disciplined approach to following a trend while keeping a close eye on the exits. The strategy can be simply stated but sports a record of profitability in most of the world’s markets that goes back decades and more than a century in some cases.

Our star system uses a blended approach to momentum by looking for stocks that have outperformed their peers over the past three, six and 12 months. Those with the best combination of gains get more momentum stars.

The fourth factor focuses on return volatility, which is a risk reduction measure. Stocks with low-to-moderate volatilities are rewarded because highly volatile stocks have the unfortunate tendency of behaving like lottery tickets.

Each stock is awarded momentum stars based on a blend of the four fators. The top 10 per cent of candidates get a full five out of five stars and are included in the five-star momentum portfolio.

In back-tests, the five-star momentum portfolio gained an average of 16.2 per cent annually over the 26 years to the end of November, 2025, when an equal-dollar amount was put into each stock at the start and the portfolio rebalanced monthly. It gained an average of 16.7 per cent annually when rebalanced yearly.

Holiday bargains

Value investors want to buy lots of value for a low price, but there is a good deal of debate over what constitutes value. Most commonly, value investors start with ratios of price to various measures of corporate performance or net worth, which have been shown to work over the long-term.

Here the hunt for bargains begins with price-to-earnings ratios (P/E), which have been a value-investing staple for decades. The idea is to seek stocks with low P/Es in an effort to buy highly profitable companies at relatively low prices.

The second measure of value comes in the form of the price-to-book-value ratio (P/B), which has an even longer pedigree. It compares a company’s market value to the amount of money that might be theoretically raised by selling its assets and paying its debts at their balance-sheet values. A low P/B is an indicator that a company is trading at a relatively low price compared to its net worth.

Investors are also wise to consider measures of business quality when looking for bargains. A company’s return on equity (ROE) fits the bill because it shows how much a company is earning compared to the capital its shareholders have invested. Companies with higher ROEs are given more stars than weaker businesses.

Finally, we like companies that generate excess cash and use it to buy back their own shares. That’s why we prefer bargain stocks that have reduced their shares outstanding over the past four quarters.

Each stock is awarded value stars based on a blend of the four value factors. The top 10 per cent of candidates get a full five out of five stars and a spot in the five-star value portfolio.

In back-tests, the five-star value portfolio gained an average of 16.9 per cent annually over the 26 years to the end of November, 2025, when an equal-dollar amount was put into each stock at the start and the portfolio rebalanced monthly. It gained an average of 16.5 per cent annually over the same period when rebalanced yearly.

Unwanted presents

The Megastars and our star rankings offer a good starting point for further research, but you should understand each company and its industry in detail before investing because an otherwise fine stock might be a poor fit for your portfolio.

Be aware of the limitations of numbers-based methods such as ours, because other factors can also be important when investing. For instance, our rankings do not reflect the character of a company, its management or its employees, which can help or hinder a business.

Similarly, unexpected events can sideswipe the market and individual companies. It’s a big reason why investing in stocks is risky, but it’s nearly impossible to avoid the market’s glum periods while generating strong long-term returns.

We hope our portfolios continue to climb, but we hasten to add that the market isn’t that predictable. Even in the best circumstances, we expect the results will be bumpy, individual stocks will disappoint and downturns will occur. We would be pleased to outperform the market by an average of a few percentage points a year over the next few decades. (For the sake of disclosure, the author owns many of the stocks mentioned herein.)

Take particular care with stocks that trade infrequently and those with very low share prices, because they may be difficult to buy or sell in a timely and cost-effective manner. The holiday period also requires extra care.

But enjoy what the market has to offer and we hope our star system leads you to a few good stocks that might enrich your holidays in the future.

Norman Rothery, PhD, CFA, is the founder of StingyInvestor.com.

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