In a bid to address the concerns of Muslim investors, the TMX group in Canada came up with S&P/TSX 60 Shariah Index a few years back. Before we start discussing 'Shariah-compliant’ stocks, let us brief you about what's Shariah.
Shariah is a law or a set of principles that is followed by Muslims to lead their daily lives accordingly, and Shariah-compliant stocks are those which are not engaged in activities that are prohibited in Islam. For example, stocks of companies selling pork, alcohol and other prohibited activities won't comply.
We've compiled a list of stocks that are compliant with the Shariah law and you may consider exploring this if you're looking to invest your money in the equity market.
Gildan Activewear Inc. (TSX:GIL)
Designer and manufacturer of basic apparel Gildan Activewear Inc. (TSX:GIL) posted a strong first-quarter earnings report last week and also reinstated its quarterly dividend. The company posted sales of US$ 590 million, representing an increase of 28 per cent year-over-year (YoY). It will pay a quarterly dividend of US$ 0.154.
Gildan's gross profit amounted to US$ 188.5 million, up by 77 per cent YoY. The net earnings were US$ 98.5 million or US$ 0.50 basic earnings per share (EPS) in Q1 2021 compared to a net loss of US$ 99.3 million.
The shares closed at C$ 42.17 on Wednesday, May 12, down from a 52-week high of C$ 46.99 on May 6, 2021. The stock has swelled by 115 per cent in a year and the past six months, it grew by 31 per cent.
Saputo Inc. (TSX:SAP)
One of the largest cheese producers in Canada, Saputo Inc. (TSX:SAP) holds a debt-to-equity (D/E) ratio of 0.65 and offers a 9.4 per cent return on equity (ROE). It is a dividend-paying stock and distributes C$ 0.175 as a quarterly dividend. In the past three years, the dividend grew at the rate of three per cent.
In its third-quarter financial results ended December 31, 2020, Saputo posted net earnings of C$ 209.8 per cent, an increase of 6.1 per cent from the same quarter of the previous year. In the same period, the adjusted EBITDA increased to C$ 431.1 million.
In the past three months, the stock grew by about five per cent and its year-to-date (YTD) growth is 10 per cent. The scrips were priced at C$ 39.15 at market close on Wednesday, May 12.
Barrick Gold Corporation (TSX:ABX)
When the market is volatile, who doesn't want to indulge in gold investments?
We've named Barrick Gold Corporation (TSX:ABX) in this list as it is one of the largest gold producers in the world and in 2020, the company produced nearly 4.8 million attributable ounces of gold and 460 million pounds of copper.
Barrick's market cap is C$ 50.7 billion and its return on assets (ROA) is 5.2 per cent. Over 5.3 million shares were traded on the TSX based on a five-day average, and the stock grew by 4.5 per cent in a week and the stock's one-month growth is 8.3 per cent. At the market close on May 12, the shares closed at C$ 28.53 apiece.
In Q1 2021, the company posted net earnings of US$ 538 million, up from US$ 400 million in Q1 2020. The free cash flow was US$ 763 million, an increase of US$ 325 million from the first quarter of 2020.
CGI Inc. (TSX:GIB.A)
The global IT-services provider is operating in at least 40 countries. CGI Inc. (TSX:GIB.A) holds a price-to-earnings (P/E) ratio of 23 and its shares were priced at C$ 106.31 apiece at market close on Wednesday, May 13.
The company offers 18.5 per cent ROE and 8.4 per cent ROA. Its market cap is C$ 23.5 billion, as per TMX. The stock's YTD growth is 5.3 per cent, and it surged by 21.5 per cent in a year.
In Q2 FY21, the net earnings rose to C$ 341.2 million, up from C$ 314.8 million in the same quarter of the previous year. The adjusted EBITDA increased to C$ 486.3 million and diluted EPS increased to C$ 1.34.
Thomson Reuters Corporation (TSX:TRI)
The multinational media conglomerate's price-to-book (P/B) ratio is 3.141 and its price-to-cash flow (P/CF) ratio is 24.5. Thomson Reuters distributes a quarterly dividend of US$ 0.405 and it registers a current dividend yield of 1.751 per cent.
On May 4, the company announced its first-quarter fiscal 2021 results and posted revenues of US$ 1,580 million, an increase of four per cent in Q1 2020. The operating profit increased by 34 per cent YoY to US$ 387 million.
In the past nine months, the stock grew by 13.5 per cent and 21 per cent in a year. The day it announced its earnings reports, the stock touched a 52-week high of C$ 122.03 and its last closing price was C$ 113.78 on May 12.
The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view.