Who said ‘buy and hold’ is dead? SmallCapPower.com takes a look at some Canadian companies that have rewarded patient investors that have held its shares over the past decade. Examining what has made these companies successful will hopefully help one find the next big winning stock for their portfolio. All share price returns represent cumulative 10-year percentage gains as of April 23, 2014.
MTY Food Group Inc. (TSX: MTY): 2,254.1% share price increase
If you’ve ever worked in an office building or shopped in a mall then chances are you grabbed lunch or a snack in a food court. If you live in Canada then you probably purchased something at some point in time from one of MTY Food Group’s franchises, which include Cultures, Thaï Express, Yogen Früz, Jugo Juice, Mr. Sub, and Extreme Pita.
As of February 28, 2014, MTY Food Group had 2,591 locations in operation, of which 2,570 were franchised or under operator agreements with the remaining 21 locations run by the corporation itself. MTY continues to bring new franchises into the company fold.
Franchising can be extremely lucrative for companies such as MTY Food Group as franchisees must pay royalty fees as a percentage of their gross revenue, as well as other potential fees. The franchisee is also under legal obligation to purchase all of the products it intends to sell as well as any ingredients and materials necessary to sell those products from head office, all while covering all of the costs required to operate their business (rent, hydro, employee salaries, etc.).
From 2003 to 2013, MTY’s annual revenue increased from $11.46 million to $101.4 million (785%), while its net income has soared 1924% to $25.7 million. During the past three years, the company has also increased its dividend by 56% to its current annual payout of $0.28 cents a share.
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