The Canadian stocks on our list have the highest projected growth rate for free cash flows
SmallCapPower | May 23, 2018: Today we have identified four Canadian stocks with encouraging projected free cash flow growth. The growth rate of future cash flows is a primary driver of many intrinsic valuation methodologies such as discounted cash flow models. Today’s companies cover a variety of industries and all trade more than 100,000 shares per day on average.
Cascades Inc. (TSX:CAS, OTC:CADNF) – $12.17
Paper Packaging
Cascades is a producer of packaging and tissue products from recycled materials. It is upstream and downstream integrated, selling products made from recycled materials, as well as on-site pickup of recycling. The company estimates that it is the sixth largest producer of containerboard packaging in North America, the fifth largest producer of tissue paper in North America and the second largest producer of coated recycled boxboard in Europe. Cascades’ year-over-year Free Cash Flow growth in 2019 is anticipated to be 169%.
- Market Cap: $1,153.2 Million
- 2019 Free Cash Flow Growth: 168.7%
- Average Daily Volume – 100 Days: 238,438.0
- YTD Total Return: -10.4%
Yangarra Resources Ltd. (TSX:YGR, OTC:YGRAF) – $6.28
Oil & Gas Exploration and Production
Yangarra is a Canadian oil and gas company with operations in Western Canada. Its primary landholdings are in central Alberta, where it focuses on the resource-rich Cardium formation. As of FY 2017, Yangarra properties were measured to host 87.9M boe of proven and probable reserves. The breakeven price for current operations, including reserve replacement, is $23.24/boe. The company’s FCF growth in 2019 is expected to be 37%.
- Market Cap: $536.2 Million
- 2019 Free Cash Flow Growth: 37.4%
- Average Daily Volume – 100 Days: 253,749.0
- YTD Total Return: 37.4%
Drone Delivery Canada Corp. (TSXV:FLT, OTC:TAKOF) – $1.66
Aerospace & Defense
Drone Delivery Canada is a logistics services company. Based in Vaughan, Ontario, it develops cost effective and scalable drone technology. DDC intends to target retail, grocery, postal and related industries to market its fleet of delivery drones. The company believes this to be a disruptive technology that will be faster, easier and cheaper than traditional delivery services. Its FCF growth for 2019 is expected to be 9.5%.
- Market Cap: $264.6 Million
- 2019 Free Cash Flow Growth: 9.5%
- Average Daily Volume – 100 Days: 573,370.0
- YTD Total Return: 84.4%
Pengrowth Energy Corp. (TSX:PGF, NYSE:PGH) – $1.06
Oil & Gas Exploration and Production
Pengrowth Energy is an Alberta-based oil producer, focused on growing its Lindbergh thermal oil property. The company’s 2018 guidance estimates average daily production to be 23k-24k barrels of oil equivalent per day. The company’s properties host proven and probable reserves of 249M bbl. Its FCF growth in 2019 is expected to be 7.3%
- Market Cap: $589.5 Million
- 2019 Free Cash Flow Growth: 7.3%
- Average Daily Volume – 100 Days: 504,758.0
- YTD Total Return: 6.0%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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