The TSX-listed Canadian stocks on our list have grown net income by at least 40% over the past five years and have low debt to EBITDA ratios under 3.0x
SmallCapPower | July 12, 2021: A company’s ability to grow its earnings has historically been a good indicator of superior stock-price performance. A lower debt/EBITDA ratio is a positive indicator that the company has sufficient funds to meet its financial obligations when they fall due. Low debt also means that the company has the capacity to take on additional loans if a good market opportunity arises. It can be good for investors to diversify their portfolios with high-growth stocks with strong balance sheets and low levels of debt. Today we have discovered four Canadian stocks with five-year earnings growth of at least 45% and a debt to EBITDA ratio below 3.0x.
*Share price data and other metrics as of July 9, 2021
Canfor Corporation (TSX:CFP) – $28.08
Paper and Forest Products
Canfor is a leading integrated forest products company based in Vancouver, British Columbia with interests in BC, Alberta, North and South Carolina, Alabama, Georgia, Mississippi and Arkansas, as well as in Sweden with its majority acquisition of Vida Group. Canfor produces primarily softwood lumber and also owns a 54.8% interest in Canfor Pulp Products Inc., which is one of the largest global producers of market Northern Bleached Softwood Kraft Pulp employing approximately 1,300 people throughout the organization and is a leading producer of high performance kraft paper. Canfor Pulp owns and operates three mills in Prince George, BC with a total capacity of 1.1 million tonnes of Premium Reinforcing Northern Bleached Softwood Kraft pulp and 140,000 tonnes of kraft paper, as well as one mill in Taylor, BC with an annual production capacity of 230,000 tonnes.
- Market Cap: $3,516.2M
- YTD-Return: +22.2%
- 1-Year Share Price Return: +107.7%
- 30-Day Average Trading Volume: 413,870
- 5-Year Net Income Growth (CAGR): 117.5%
- Debt/EBITDA: 0.3x
GDI Integrated Facility Services Inc. (TSX:GDI) – $55.42
Commercial Services and Supplies
GDI Integrated Facility Services is a one-call destination for expert facility maintenance across Canada and the United States. GDI’s indoor cleaning services include janitorial, sanitation, carpet cleaning, furniture, floor stripping, polishing, HVAC cleaning, blind cleaning, special event set-up and clean-up, and recycling programs. Outdoor cleaning includes window cleaning, pressure washing, snow removal, grounds maintenance, and graffiti removal.
- Market Cap: $1,272.9M
- YTD-Return: +24.6%
- 1-Year Share Price Return: +85.0%
- 30-Day Average Trading Volume: 12,820
- 5-Year Net Income Growth (CAGR): 52%
- Debt/ EBITDA: 1.4x
West Fraser Timber Co. Ltd. (TSX:WFG) – $93.46
Paper and Forest Products
West Fraser is a diversified wood products company with more than 60 facilities in Canada, the United States, the United Kingdom, and Europe. From responsibly sourced and sustainably managed forest resources, the Company produces lumber, engineered wood products (OSB, LVL, MDF, plywood, and particleboard), pulp, newsprint, wood chips, other residuals and renewable energy. West Fraser’s products are used in home construction, repair and remodeling, industrial applications, papers, tissue, and box materials.
- Market Cap: $11,096.1M
- YTD-Return: +14.3%
- 1-Year Share Price Return: +84.8%
- 30-Day Average Trading Volume: 712,330
- 5-Year Net Income Growth (CAGR): 75.2%
- Debt/ EBITDA: 0.6x
Doman Building Materials Group Ltd. (TSX:DBM) – $7.98
Distribution and Shipping
Doman is a leading North American distributor of building materials, and is Canada’s only fully integrated national distributor in the building materials and related products sector. Doman operates several distinct divisions: CanWel Building Materials with multiple treating plant, planing facilities and distribution centres coast-to coast in all major cities and strategic locations across Canada. As well as Hixson Lumber Company in the central United States, with 19 treating plants and five sawmills located in eight states, headquartered in Dallas, Texas. In addition, through its CanWel Fibre division, the Company operates a vertically integrated forest products company based in Western Canada. CanWel Fibre owns approximately 117,000 acres of private timberlands, strategic licenses and tenures, log harvesting and trucking operations, several post and pole peeling facilities and two pressure-treated specialty wood production plants and a specialty saw mill.
- Market Cap: $691.2M
- YTD-Return: +4.0%
- 1-Year Share Price Return: +73.1%
- 30-Day Average Trading Volume: 253,830
- 5-Year Net Income Growth (CAGR): 45.2%
- Debt/ EBITDA: 2.8x
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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