The TSX stocks on our list have strong historical and forward Return on Equity (ROE)
SmallCapPower | August 31, 2018: Return on Equity (ROE) is the amount of net income returned as a percentage of shareholders’ equity. The TSX stocks we have discovered today showcase some of the strongest ROE in the Canadian small-cap universe. They could prove a strong investment as they continue to grow.
Computer Modelling Group Ltd. (TSX:CMG) – $8.65
Software
Computer Modelling Group (CMG) is a Canada-based computer software company serving the oil and gas industry. The Company develops and licenses its proprietary reservoir simulation software for international oil companies in ~60 countries. The Company also provides professional services including consulting, training and contract research activities.
- Market Cap: $693.9M
- Return on Equity FY2017: 36.4%
- Return on Equity FY2018: 37.6%
- YTD Total Return: -8.6%
First National Financial Corp. (TSX:FN) – $29.49
Corporate Financial Services
First National is a Canada-based financial services company. The Company’s Residential division originates single-family residential mortgages, while its Commercial segment is focused on multi-unit residential and commercial mortgages. First National has $32.7M in mortgages under administration. The Company owns a number of financial services subsidiaries and operates out of five offices across Canada.
- Market Cap: $1,768.4M
- Return on Equity FY2017: 30.8%
- Return on Equity FY2018: 34.4%
- YTD Total Return: 6.5%
Stingray Digital Group Inc. (TSX:RAY.A) – $9.19
Broadcasting
Stingray Digital is a multi-platform music and media solutions provider. The Company provides music and video content to commercial partners, representing ~400M subscribers across 74,000 establishments worldwide. Content is distributed across TV platforms, the Internet, mobile devices, and game consoles.
- Market Cap: $368.0M
- Return on Equity FY2017: 23.9%
- Return on Equity FY2018: 28.0%
- YTD Total Return: -6.3%
Aritzia Inc. (TSX:ATZ) – $16.42
Apparel & Accessories Retailers
Aritzia is a women’s fashion retailer that designs apparel and accessories for a collection of exclusive brands that sell under the Aritzia banner. The Company operates over 80 retail stores along with an e-commerce platform. Aritzia is one of the fastest growing women’s retail brands in the world, with revenues having grown at a 21% CAGR since 2005.
- Market Cap: $938.9M
- Return on Equity FY2017: 31.2%
- Return on Equity FY2018: 25.0%
- YTD Total Return: 28.8%
Ero Copper Corp. (TSX:ERO) – $8.71
Specialty Mining & Metals
Ero Copper is a base metals mining company focused on developing copper reserves in Brazil. The Company’s flagship project is the MCSA mine with a 2018 guidance of 25.5 – 27.5kt of copper production. In 2018, the Company has expanded operations within the Curaçao Valley and in May announced major copper deposits of 1.33% Cu over 23m within the Pilar Mine. Ero expects to reach 53.1kt of production in 2021.
- Market Cap: $734.4M
- Return on Equity FY2017: 41.6%
- Return on Equity FY2018: 24.3%
- YTD Total Return: 14.9%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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