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.
New Look Eyewear Inc. (TSX: BCI): Saw a 1,839% stock price appreciation during the past decade.
Sadly, a reality of life is that most of us at some point will need eye glasses or contact lenses. Fortunately the days of being called “four eyes” are largely over as eyewear has progressed from function to fashion.
New Look Eyewear turned this need into a thriving business, with eye care products and services operating out of retail outlets mainly in Quebec, Atlantic Canada, and eastern Ontario.
From its humble beginning as Benvest Capital Inc., New Look Eyewear was originally formed as an Income Trust, with the intent of distributing its profits to unitholders while at the same time maintaining sufficient capital to grow the business. In 2005, the company had yearly revenue of $40.3 million, which increased to $58.2 million by 2007 and as a result of its economies of scale through an expansion to 57 stores was able to generate a profit of $4.7 million that year.
New Look amalgamated with Sonomax Hearing Healthcare Inc. in 2009 and converted into a corporation in 2010. Having grown to 64 stores by then it also initiated an annual dividend of $0.60 a share.
By 2013, its share price began to explode. The company opened its 74thstore and acquired Vogue Optical Inc. for $74 million, adding another 65 stores in Atlantic Canada as well as annual revenue of approximately $40 million. New Look ended the year with record revenue of $91 million.
And in 2014, New Look bought Greiche&Scaff and its 49 retail stores in Quebec for $17.75 million. Greiche&Scaff had annual revenue of $30.7 million. The company also introduced a Dividend Reinvestment Program that same year, allowing long-term investors to accumulate more shares at a 5% discount to the market price.
New Look’s long-term success seems to be the result of a well-run business that was able to grow organically as well as through strategic acquisitionsin order to become a dominant brand in its geographically niche market. It also helps to operate a business with gross margins that exceed 78%. For those forced to wear eye glasses it is not uncommon to pay up to $400 a pair although a large portion of that cost is often covered by company benefit plans, all of which has worked to New Look’s benefit.
The company has just 13.1 million shares outstanding, so it was able to grow without unnecessary dilution to existing shareholders. Its stock price, meanwhile, has been nearly a ‘10-bagger’ during the past decade and is now trading at more than $24 a share.
Read more top performing Canadian stock articles:
http://www.smallcappower.com/posts/article-top-performing-canadian-stocks-over-10-years-1-8-2014
http://www.smallcappower.com/posts/article-top-performing-canadian-stocks-over-10-years-25-7-2014
http://www.smallcappower.com/posts/article-top-performing-canadian-stocks-over-10-years-18-7-2014
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